U.S. grains: Corn, soy rally as slow planting pace ignites short-covering

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Chicago | Reuters — U.S. corn futures climbed more than three per cent on Tuesday and soybeans bounced back from a decade low as planting delays in the Midwest crop belt sparked a round of short-covering, analysts said.

Additional support stemmed from optimistic comments from Washington and Beijing that tempered concerns about a further escalation in their trade war.

Wheat futures followed the firm trend, rising about two per cent.

Chicago Board of Trade July corn settled up 12-1/4 cents at $3.68-3/4 per bushel (all figures US$). CBOT July soybeans ended up 29 cents at $8.31-1/2 a bushel, a day after dipping to $7.91, the lowest price for a most-active contract since December 2008.

CBOT July wheat finished up 11-1/2 cents at $4.48-1/2 a bushel.

All three markets rose after the U.S. Department of Agriculture late on Monday reported that the planting pace for corn and soybeans was slower than expected amid widespread weather delays.

U.S. farmers seeded 30 per cent of the U.S. 2019 corn crop by Sunday, the government said, lagging the five-year average of 66 per cent as well as the average estimate in a Reuters analyst survey of 35 per cent.

The soybean crop was nine per cent planted, behind the five-year average of 29 per cent and the average trade estimate of 15 per cent.

“This week’s turnaround in prices came as traders recognized the significance of the delays, causing selling to dry up, short-covering and bottom-picking to begin and momentum flipped,” INTL FCStone chief commodities economist Arlan Suderman said in a note to clients.

Commodity funds have built sizable net short positions in CBOT corn, soybean and wheat futures, leaving the markets vulnerable to short-covering rallies.

“For the short term, the shorts are on the run. The farmer is looking out the back window and is not likely to sell the first rally, so we probably have a little bit more to run on the upside,” said Rich Feltes, vice president for research with R.J. O’Brien.

“Now I think we are chained to the whims of the weather models,” Feltes added.

Wall Street also rebounded as investors took heart from comments of U.S. and Chinese officials a day after a spike in tensions between the world’s two largest economies rattled financial markets.

China is by far the world’s largest soybean buyer.

U.S. President Donald Trump sounded optimistic about prospects for a trade deal even as his administration readied 25 per cent tariffs on all remaining Chinese imports, while the Chinese government said the two sides had agreed to keep talking.

Corn futures drew light support as private analytics firm IEG Vantage, formerly known as Informa Economics IEG, projected U.S. 2019 corn plantings at 90.7 million acres, below the USDA’s March forecast of 92.8 million acres.

IEG projected U.S. 2019 soybean plantings at 86.4 million acres, above the USDA’s March forecast of 84.6 million, according to an IEG client note seen by Reuters.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Michael Hogan in Hamburg and Colin Packham in Sydney.

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