U.S. grains: Wheat futures soar on short-covering

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — U.S. wheat futures jumped about five per cent on Thursday as a flurry of export deals prompted funds to cover short positions, analysts said.

Corn futures rose on short-covering and firm cash markets despite the ongoing U.S. harvest, while soybeans followed the higher trend.

At the Chicago Board of Trade, December wheat settled up 19-1/4 cents at $4.16 per bushel (all figures US$). December corn ended up 12-1/2 cents at $3.49-1/2 a bushel and November soybeans rose 10-3/4 cents, settling at $9.56-1/4 a bushel.

Wheat posted the biggest advance on a percentage basis. The December contract reached $4.17, a six-week high, and surpassed its 50-day moving average, a bullish technical signal.

Commodity funds held a historically large net short position in CBOT wheat as of Oct. 4, leaving the market vulnerable to short-covering rallies.

Also, export business picked up in the last day, with Saudi Arabia and Egypt both announcing plans to buy wheat. Algeria announced a purchase tender earlier this week, and Syria struck a deal to purchase one million tonnes of Russian wheat.

“There is a lot of world wheat business around. Maybe that is enough, with the funds as short as they are, to get the wheat going,” said Dan Cekander, president of DC Analysis.

Short-covering also lifted corn, along with strength in the domestic cash market. As the U.S. harvest nears the halfway point, farmers generally have been selling soybeans but storing their corn, holding out for higher prices.

“There is very limited selling pressure from harvest. We are moving along and just not seeing the selling,” Cekander said.

CBOT December corn neared the $3.50 mark toward the close. The contract hit $3.49-3/4, its highest since July 20, in the final minute and settled near that level, a strong close from a technical standpoint.

Soybeans rallied from early declines, following strength in corn and wheat as well as in crude oil. A softer U.S. dollar index added support to commodities, making U.S. goods more attractive on the global market.

Also, the November soybean contract fell to $9.37-1/4 a bushel but held above its Sept. 27 long-term low of $9.34, a bullish chart signal.

The soybean market faces overhead resistance from a record-large U.S. crop. The U.S. Department of Agriculture on Wednesday raised its forecast of U.S. soybean production to 4.269 billion bushels.

Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting Reuters by Sybille de La Hamaide in Paris and Naveen Thukral in Singapore.

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