Chicago | Reuters — Wheat futures on the Chicago Board of Trade surged more than three per cent on Monday, notching their biggest daily gains since October as investors liquidated a portion of the record-large short stake, traders said.
Corn and soybean futures each rose to fresh multi-month highs, before trimming gains in largely technically driven trade. Wheat prices led the rally, with CBOT May wheat finishing 13 cents higher at $4.72-3/4 per bushel, a roughly two-week high (all figures US$).
The gains came despite rainfall in the southern U.S. Plains that was seen as mostly beneficial for developing wheat plants, especially in the parched southwestern part of the region. Heavy precipitation of as much as 61 cm also caused flash flooding in Texas, killing one person and delaying hundreds of flights.
U.S. Commodity Futures Trading Commission data released after the close of trading on Friday showed speculative investors, including hedge funds, holding a net short in CBOT wheat futures of 152,453 contracts, the biggest net short on the books since 2006.
Those investors also trimmed net shorts in corn and extended net longs in soybeans, the CFTC said.
“The Commitments of Traders (CFTC data) showed record shorts, and typically you get a rally out of that. But the rains across the hard wheat belt was kind of capping the rally, and should eventually be bearish,” said Linn + Associates analyst Roy Huckabay.
The U.S. Department of Agriculture after the close of trading rated the U.S. winter wheat crop 57 per cent good to excellent, matching expectations. USDA said corn plantings were 13 per cent done, up from the five-year average of eight per cent but slightly below the average analyst estimate of 14 per cent.
CBOT corn hit the highest prices since December and soybeans the highest since August. Excessively wet weather in Argentina has delayed the soybean harvest while dry conditions were hampering corn crop development in Brazil.
“Argentina’s key production areas have received too much rain of late, with more on the way. That has caused delays both in the field and at port,” Commonwealth Bank of Australia analyst Tobin Gorey said. “Speculation is also mounting over how much of the crop could be damaged as a result.”
The Commodity Weather Group said in a note to clients that “minimal rains over the next 10 days (in Brazil) allow stress to expand to nearly half of the belt.”
CBOT May corn settled up 2-1/2 cents at $3.81 per bushel and CBOT May soybeans down 1-3/4 cents at $9.54-1/2.
— Michael Hirtzer reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Julie Ingwersen in Chicago, Nigel Hunt in London and Naveen Thukral in Singapore.