U.S. grains: Wheat climbs on short-covering ahead of weekend

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — U.S. wheat futures rose about one per cent on Friday as dry weather and expectations of a drop in U.S. wheat plantings prompted short-covering ahead of the weekend, analysts said.

Corn and soybeans also firmed in largely technical moves.

Chicago Board of Trade December wheat settled up five cents at $4.08 per bushel after reaching $4.10, the contract’s highest since Nov. 10 (all figures US$).

CBOT December corn ended up 3-1/2 cents at $3.45-1/2 a bushel after reaching $3.46-3/4, its best since Nov. 9. The contract pushed through chart resistance at its 50-day moving average near $3.43-1/2.

CBOT January soybeans closed up 4-1/4 cents at $9.93-3/4 a bushel.

December wheat dipped to a near six-week low on Monday but held above contract lows set in August, a supportive technical sign. Commodity funds hold a large net short position in CBOT wheat, leaving the market vulnerable to short-covering.

“You can tout dryness in the central southern Plains, or the lower wheat acres expected for next year, although new-crop wheat is not the leader. I think it’s pure and simple short-covering, due to the inability to take it lower this week,” said Tom Fritz, a partner with EFG Group in Chicago.

Private analytics firm Informa Economics on Thursday lowered its estimate of U.S. winter wheat plantings for harvest in 2017 to 33.761 million acres from 35.421 million, trade sources said.

Drought expanded last week in much of the U.S. Southeast and Plains states including Oklahoma, Kansas and Colorado, according to the latest weekly U.S. Drought Monitor report, produced by a consortium of climatologists.

And updated 90-day weather outlooks released Thursday by the U.S. Climate Prediction Center showed drought persisting in those regions through February.

“When you throw stuff like that out there against almost a vacuum of fresh news, and sprinkle in a bit of financial optimism on markets that have beaten down pretty good, it doesn’t take much,” said Jim Gerlach, president of A/C Trading in Fowler, Indiana.

Corn drew support from hefty open interest in CBOT December put and call options at the $3.50 strike, which appeared to act as a magnet for prices ahead of December options expiration next week, Fritz said.

For the week, wheat rose 1.2 per cent, corn climbed 1.5 per cent and soybeans was up about 0.8 per cent.

— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Gus Trompiz in Paris.

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