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U.S. wheat firms on short-covering bounce

U.S. wheat futures rose 1.1 per cent on Monday, supported by rising global demand as well as a round of short-covering, traders said.

Corn futures edged higher on spillover strength from the wheat market but soybeans dipped amid hopes that some recent rain across key growing areas of the U.S. Midwest could boost final harvest yields.

The gains in Chicago Board of Trade wheat were the eighth in the last 10 sessions but traders said that there was still a bearish tone hanging over the market due to abundant supplies. The rally of the last two weeks has been modest, with prices for the benchmark contract still just 22 cents above a 14-month low (all figures US$).

“You are seeing a little bit of short-covering,” said Chris Robinson, senior trader and analyst at Top Third Ag Marketing. “It could just be a short term blip.”

The Commodity Futures Trading Commission said in its latest report on Friday that large speculators held their biggest bearish bet in CBOT wheat since May 2012, leaving the market ripe for short covering any time that prices tick higher.

CBOT December soft red winter wheat settled up 7-1/4 cents at $6.53-1/2 a bushel. Volume was light, with only about 52,000 contracts trading during the session, about half of the 250-day average.

The China National Grain and Oils Information Centre increased its projections for Chinese import demand to 7.5 million tonnes, having previously pegged imports at 6.5 million tonnes.

The revised figure would be the highest imports for China in a decade. Bad weather that damaged the Chinese harvest in May and June has boosted demand for U.S. wheat.

However, U.S. wheat, which is still more expensive than supplies from most other parts of the world, will have to compete with a hefty Canadian crop on international markets and internally, French analyst Agritel noted.

CBOT December corn was up 2-1/4 cents at $4.53-1/4 a bushel. Traders said that gains in corn were restrained by seasonal harvest pressure.

“The weekend yield reports have not changed much, the boys in the fields are still pretty happy about what they are getting, and it is generally coming in at or a bit above expectations,” Charlie Sernatinger of ED+F Man Capital said in a research note to clients.

CBOT November soybeans fell 7-1/2 cents to $13.07-3/4 a bushel, hitting their lowest level since Aug. 21.

Rain across broad areas of the U.S. Midwest last week likely improved prospects for some late-maturing soybeans, which should be reflected in the U.S. government’s weekly rating of the crop Monday afternoon, analysts said.

Soybean ratings were seen rising one percentage point to 51 per cent good to excellent as of Sept. 22, according to the average of estimates from nine analysts in a Reuters poll. The U.S. Department of Agriculture will release its latest assessment of the crop at 3 p.m. CT.

— Mark Weinraub is a Reuters correspondent covering grain and oilseed futures in Chicago. Additional reporting for Reuters by Sybille de La Hamaide in Paris and Colin Packham in Sydney.

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