U.S. grains: Wheat jumps on Black Sea woes, short-covering

(Lisa Guenther photo)

Chicago | Reuters — U.S. wheat futures surged 5.2 per cent to nearly a six-month high on Monday on concerns about a slowdown in exports from Russia and other countries in the Black Sea region.

Soybean and corn futures were close to unchanged, although most contracts rose slightly after fluctuating between positive and negative territory during the session.

A round of short-covering by investment funds added to wheat market strength. The front-month Chicago Board of Trade wheat futures contract has risen four straight days, gaining 11.9 per cent during the streak and peaking at its highest since June 11.

Russia is introducing new regulations that could lead to a big drop in grain exports, the country’s Veterinary and Phytosanitary Surveillance Service said late last week. Additionally, much of the winter wheat crop in Ukraine is under threat from winterkill because of sparse snow cover.

Problems with the crop from those key wheat-exporting countries could boost overseas demand for U.S. supplies.

“We are anticipating the United States is going to be in a better export position,” said Brian Hoops, president of brokerage Midwest Market Solutions. “The funds are covering shorts on that theory.”

CBOT December soft red winter wheat settled up 29-1/2 cents at $6.06-3/4 a bushel (all figures US$). The most actively traded March contract was 28-1/4 cents higher and also settled at $6.60-3/4 a bushel.

The front-month contract’s 5.2 per cent gain was its biggest daily increase in percentage terms since July 14.

“Ukraine, Russia and South America have had some (weather) problems,” said Mark Schultz, chief analyst at Northstar Commodity Investment Co. “We are just chipping away at the size of the crop.”

CBOT January soybeans were one cent higher at $10.17 a bushel. The contract hit technical resistance at its 30-day and 100-day moving averages.

Early gains in soybeans were kept in check by concerns over global demand, with economic data indicating a cooling Chinese economy.

China’s official Purchasing Managers’ Index for November came in lower than expected on Monday, underlining challenges facing the country’s manufacturing sector from rising costs and softening demand.

CBOT December corn was 1/4 cent lower at $3.75-1/2 a bushel. The March contract 1 cent higher at $3.89-3/4 a bushel.

— Mark Weinraub is a Reuters correspondent covering crop commodity markets from Chicago. Additional reporting for Reuters by Colin Packham in Sydney and Sybille de La Hamaide in Paris.

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