U.S. grains: Wheat up on short-covering

(Stephen Ausmus photo courtesy ARS/USDA)

Chicago | Reuters — U.S. corn and wheat futures rose on Friday to their highest levels in more than a week and gained against soybeans as traders took profits on inter-market spreads, analysts said.

Soybeans also faced pressure from expectations that U.S. farmers will plant more soybeans than the U.S. Department of Agriculture’s projections.

At the Chicago Board of Trade, July wheat settled up 6-3/4 cents at $4.74-3/4 per bushel (all figures US$).

CBOT July corn rose 1-3/4 cents to $3.90-3/4 a bushel after reaching $3.91-1/4, its highest since May 3. July soybeans settled down seven cents at $10.65 per bushel.

Wheat rose as traders covered short positions and exited long soy/short wheat spreads that have been profitable in recent weeks.

“Short-covering is supporting wheat values,” Karl Setzer, analyst with the MaxYield Cooperative in West Bend, Iowa, said in a note to clients.

But wheat fundamentals remain bearish, given USDA’s forecast for domestic stocks to reach a 29-year high by the end of the 2016-17 marketing year.

Wet conditions in the southern Plains hard red winter wheat belt have raised concerns about grain quality as the crop matures, but yield prospects are still strong.

Corn rose and soy fell on ideas that USDA’s June 30 acreage report could show a shift of one million to two million acres from corn into soybeans compared with the government’s March 31 planting intentions report.

New-crop November soybeans have risen about $1.80 per bushel since March 1 while new-crop December corn has climbed only about 25 cents in the same period.

“More reports are coming in of acres shifting from corn or wheat production to soybeans, primarily in the eastern Corn Belt… The return on soybeans right now is much greater than for grains,” Setzer said.

The most-active July soybean contract recorded a third straight daily decline, its longest slide since late February, after roaring to a 21-month top on Tuesday when USDA projected lower-than-expected U.S. soy inventories.

“The primary weakness in soybeans is chart and money-flow related after the oilseed failed to even test Tuesday’s spike highs,” INTL FCStone chief commodities economist Arlan Suderman said in a client note.

A broad decline in Chinese futures lent early pressure.

“U.S. soybean exports were down and Chinese commodity markets are taking a hit today which is adding pressure on CBOT,” said Kaname Gokon at brokerage Okato Shoji in Tokyo.

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

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