U.S. grains: Wheat up on prospects for Egyptian sales, softer dollar

(Lisa Guenther photo)

Chicago | Reuters — Chicago Board of Trade wheat futures climbed nearly three per cent on Thursday, buoyed by a softer dollar and hopes for U.S. sales of the grain to top buyer Egypt, traders said.

Soybeans rose, led by strength in soyoil and Malaysian palm oil, while corn ended firm after a choppy session.

At the CBOT, March wheat settled up 14-3/4 cents, or 2.9 per cent, at $5.25-3/4 per bushel. March soybeans rose 9-1/4 cents, to $9.81-3/4, and March corn ended up 1-3/4 cents at $3.85-1/4 (all figures US$).

Egypt’s state grain buyer could purchase U.S. wheat to make use of a $100 million credit line made available to it by the U.S.

“Part of the conditions of using that grant is to have a tender for U.S. wheat to find the best price,” Egyptian Supplies Minister Khaled Hanafi said. “The first slot that will be available for us to use is $100 million.”

Technical buying lent support. CBOT wheat was due for a bounce after falling nearly 15 per cent during January, its biggest monthly decline in three years, amid ample world supplies.

“We have been oversold for quite some time and are seeing some short-covering coming into the market,” said analyst Shawn McCambridge of Jefferies Bache in Chicago.

Also supportive was a setback in the dollar, coupled with strength in crude oil and equity markets. Similar trends on Tuesday triggered a broad commodities rally.

Soybeans rose as surging Malaysian palm oil futures lifted global vegetable oils markets, including CBOT soyoil.

Malaysian palm jumped more than five per cent after plans by Indonesia’s government to ramp up biodiesel subsidies passed a legislative hurdle. Higher subsidies could boost the use of palm oil for blending into biodiesel, demand for which has dwindled after crude oil prices crashed 60 per cent between June and late January.

Analysts said the outlook for a record Brazilian soybean harvest remained a drag on soy prices.

“Weather forecasters continue to expect timely rainfall in most Brazilian crop areas,” Tobin Gorey, director of agricultural strategy for Commonwealth Bank of Australia, said in a note to clients.

U.S. soybean export sales in the week ended Jan. 29 came in at the high end of market estimates but were the second-lowest since October, indicating a seasonal slowdown.

— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Gus Trompiz in Paris and Colin Packham in Sydney.

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