Chicago | Reuters—Benchmark Chicago Board of Trade wheat futures jumped more than four per cent on Wednesday as weather worries in parts of the United States and Europe, coupled with signs of fresh global export business, prompted speculators to cover short positions, brokers said.
Corn and soybean futures followed the higher trend ahead of a U.S. government and market holiday on Thursday.
CBOT July wheat WN25 settled up 25-1/4 cents, or 4.6 per cent, at $5.74-1/4 per bushel after reaching $5.75, the contract’s highest price since March 24. CBOT July soybeans SN25 ended up 3/4 cent at $10.74-3/4 a bushel and July corn finished up 2 cents at $4.33-1/2 a bushel.
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Wheat posted the biggest advances. Commodity funds hold a hefty net short position in CBOT wheat futures, leaving the market vulnerable to short-covering rallies, analysts said.
“Anybody that sold Chicago wheat in the last couple of months is under water. So short-covering is the big thing, and you’ve got a few smaller stories that are supporting and encouraging that,” said Terry Linn, analyst with Linn & Associates in Chicago.
He noted that Algeria booked more than half a million metric tons of wheat in a tender this week, according to European traders. In addition, the U.S. winter wheat harvest is off to a slow start due to wet conditions, while parts of Russia and the European Union have been dry.
Soybean futures inched higher while soyoil futures BOv1ended nearly unchanged, consolidating after a spike last Friday tied to larger-than-expected proposed U.S. biofuel mandates. The implied increase in domestic demand for soyoil has muted some of the concern about a slowdown in U.S. soybean exports due to trade tensions with China, the world’s biggest soybean customer.
“Having this domestic demand mandated is a huge relief, and it changes the fundamental complexion of the (soybean) balance sheet,” Linn said.
Corn futures rose along with wheat, but the most-active July contract CN25 trailed the gains in deferred contracts, reflecting easing concerns about tight supplies of last year’s U.S. corn harvest and rising competition for export business, which has been a mainstay for U.S. corn futures.
“Even though corn demand has been good so far, you just haven’t had any additional demand develop. And at the same time, Brazil brought home a massive crop. And that is going to be competing with us here for a while,” Linn said.
Traders await market direction from the USDA’s weekly export sales report, which will be released on Friday, a day later than usual, due to the U.S. Juneteenth holiday on Thursday.
—Reporting by Ella Cao and Lewis Jackson in Beijing and Sybille de La Hamaide in Paris
