U.S. wheat rose over one per cent on Wednesday, posting its best advance in two weeks on reports that China bought large quantities of wheat from Australia and the U.S.
Wheat also traded higher on a bargain buying spree, after a series of eight consecutive daily losses drove the market to a one-year low earlier in the week.
Soybeans advanced for the eighth day in a row on tight stocks of soybeans while the corn market turned choppy and mixed, with crop-friendly weather in the U.S. restraining gains in both the corn and soy futures markets.
Traders and analysts were skeptical that the wheat market would trace a steady line upward due to the plentiful global stockpile of wheat and escalating tensions and demonstrations in Egypt, the largest global wheat buyer.
“The sale of wheat to China is supportive but I’m concerned about what’s going on in Egypt, the world’s largest buyer. What’s happening right now in Egypt isn’t bullish,” said Sterling Smith, market specialist for Citigroup.
Market participants eyed the turmoil in Egypt which has erupted over President Mohamed Mursi’s policies.
Nevertheless, wheat futures prices held onto gains Wednesday following the news that China bought 300,000 tonnes of wheat from Australia and 360,000 tonnes from the U.S.
Chicago Board of Trade July wheat was up 8-1/4 cents per bushel at $6.57-3/4, July corn was up 5-1/2 at $6.78-1/4 and July soybeans were up 10-1/2 at $15.83-1/2 (all figures US$).
Focus on bargain hunting
Spot U.S. corn rose for a second session as bargain hunting and strong oil prices led to a rebound from the lowest level in two-and-a-half years for new-crop December earlier this week on expectations of record production.
The December contract continued to flounder on Wednesday and closed nearly flat.
New-crop soybeans rose on bargain hunting after four sessions of declines and old-crop soy stayed strong due to tight stocks of soy in the U.S.
In other markets, oil prices surged on a sharp decline in crude stockpiles in top consumer the United States and political unrest in Egypt, which could lead to supply disruptions.
“We have seen a bit of an improved tone come through pricing after bearishness over the past few days. It is just positioning by traders,” said Luke Mathews, a commodities strategist at Commonwealth Bank of Australia.
“We are still looking at a scenario of very large crops in 2013-14, and that is likely to replenish the tight old-crop situation.”
U.S. corn and soybean crops have improved in the past week, aided by warmer weather, although heavy storms damaged crops in parts of the northern Midwest, the U.S. Department of Agriculture and state reports said.
Market posturing ahead of holiday
“Markets had gotten oversold. We’ve taken about a dollar out of beans since mid-June and around 75 cents out of corn, so I think there is a fair amount of short-covering before the holiday,” Smith said.
Markets closed early at 12 p.m. CT on Wednesday rather than the normal 1:15 p.m. CT closing time and will reopen at 8:30 a.m. CT on Friday, due to the U.S. Independence Day Holiday.
“There’s a little nervousness about hotter weather coming up later in the month. Right now it looks ideal but of course that could change,” Smith said.
Crop-friendly weather continues to dominate the U.S. Midwest corn and soybean growing region with moderate temperatures and occasional rainfall expected into at least mid-July, an agricultural meteorologist said on Wednesday.
“Rains will return to the northwestern Corn Belt by the weekend and spread across the west through the middle of next week,” said Joel Widenor, meteorologist for Commodity Weather Group.
Widenor said the rains would ensure moisture supplies remain adequate and “plenty of moisture also will aid pollinating corn in the south.”
Crop forecaster Lanworth on Wednesday raised its outlook for the 2013-14 U.S. corn and soybean harvests, due to an increased probability for normal to cool summer temperatures.
— Sam Nelson is a Reuters correspondent covering the grain and soy futures markets in Chicago. Additional reporting for Reuters by Sybille de La Hamaide and Valerie Parent in Paris and Naveen Thukral in Singapore.