US wheat up as global crop concerns stoke export hopes
Thursday, 08 November 2012
By Abdul Ahad
CHICAGO: US wheat futures rallied for the third day in a row on Wednesday, jumping 1.9 percent to their highest level in more than five weeks as concerns about production shortfalls in exporters like Argentina and Australia boos ted prospects for US supplies on the global market, tra ders said.
Corn also was higher, pulled up by the wheat market, while soybean futures weakened, briefly breaking below $15 a bushel for the first time in three weeks on expectations that the US government will raise its estimate of the US crop in its monthly report on Friday.
Wheat has risen 3. 4 percent so far this week, shrugging off bearish outside market influences such as a firm dollar and weakening stock market to post it s biggest three-day rally in more than six weeks.
“It is surprising and impressive with the deterioration in all the outside markets,” said Ken Smithmier, a n a nalyst with the Hightower Report. “People continue to anticipate better export business for us. There are a lot of major production cuts internationally that are going to be of great importance.”
At 1 1 : 46 a.m. CST (1 746 GMT), Chicago Board of Trade December wheat futures were up 16 -1/2 cent s at $8.93 -1/2 a bushel. Prices peaked at $8.97 a bushel, their highest level since Oct. 1, bef ore running into resistance at the key $9 threshold.
Speculative funds held a net short position on wheat futures, which left prices prone to rallies as the noncommercial traders covered those bearish bets.
European benchmark January wheat in Paris closed up 1.4 percent at 275 . 2 5 euros a tonne, hitting a new contract high of 277.50 during the session.
CBOT December corn was up 3-1/4 cents at $7.4 4-1/4 a bushel. Gains in corn were limited by the firm dollar, w hich dampens enthusiasm for agricultural commodities, and expectations that the US Agriculture Department’s crop forecast will stabilize in the monthly supply and demand report on Friday.
CBOT January soybean futures were down 7 cents at $15.0 8- 1 / 2 a bushel b ut well above their intraday low of $14.99. CBOT soybeans have fallen nearly 16 percent from the record high of $17.94-3/4 hit in early September, when farmers feared that the drought had devastated their crop.
A sharp drop in the crude oil market weighed heavily on soybeans. F alling equity markets, which weakened as investors renewed their focus on a looming fiscal showdown in Congress after the re-election of President Barack Obama adde d further pressure.
Traders were awaiting the upcoming USDA report, which is expected to again boost the size of this year’s soybean crop as harvest results around the Midwest showed that damage from the worst drought in more than 50 years was not as bad as initially feared.
“We still have got some liquidation here by the funds on these markets, primarily in the beans,” said Dewey Strickler, president of Ag Watch Market Advisors. “The expectations are we are going to see USDA maybe up the yield (estimate) a little bit here. You have got maybe a little bit of improvement in weather in South America.”
Rainfall in Argentina this week will further slow fieldwork and early seedings of corn and soybeans in that country, said Drew Lerner, meteorologist for World Weather Inc.
“There will be rain Thursday through Saturday which will set them back a bit, but it looks drier for next week,” he said.
Favorable crop weather continues in southern Brazil, with drier weather for the next 10 days boosting plantings, and northern Brazil continues to get needed rainfall.