September 27, 2013
US wheat futures rallied on Wednesday to their highest levels in more than two months on hopes that US supplies will gain traction in the competition to fill overseas demand, traders said. The strength in wheat, which has risen for 10 of the last 12 trading sessions, spilled over into the corn and soyabean market.
Wheat’s recent gains – prices for the benchmark Chicago Board of Trade December soft red winter wheat contract have risen 3.6 percent so far this week – have also caused some investors to cover short positions as the market has surged through key technical resistance points.
Worries that frost will limit wheat production in Argentina, as well as expectations that demand from China will rise with domestic prices at all-time highs and high-quality supplies dwindling, have boosted export prospects for US supplies and spurred futures buying. “Both of those things give the market a little bit better reason to try to poke above resistance and see if we can reach a higher value level,” said Bill Gentry, a broker at Risk Management Commodities.
Fundamentals suggest the market may be able to hold onto recent gains, even with domestic supplies abundant and Canada harvesting its largest crop in more than two decades. “If Argentina has got a problem with their wheat supply, it means a problem for the world exportable supplies,” said Mike Zuzolo, president of Global Commodity Analytics in Atchison, Kansas. “Global supplies now, especially good quality supplies, are going to be tighter than they thought they would be three weeks ago.”
CBOT December wheat futures closed up 12-1/4 cents at $6.70-1/2 a bushel. Prices peaked at $6.75 a bushel, the highest on a continuous basis for the front-month contract since July 16. The gains pushed CBOT December wheat above the high end of its 20-day Bollinger range for the first time since May 3. MGEX spring wheat and KCBT winter wheat also posted strong gains. CBOT December corn was up 6 cents at $4.54-3/4 per bushel while CBOT November soyabeans were 9-1/4 cents higher at $13.21-3/4 a bushel.
Uncertainty over US production as harvest nears added further support to soyabeans. Bargain buyers helped prop up corn after the front-month contract dropped to a three-year low on Tuesday. Gains in the corn market were limited by seasonal harvest pressure as early yield reports from the field were better than expected in eastern areas of the US Midwest. Satisfactory weather is expected over the next couple of weeks for harvesting of the 2013 US corn and soyabean crops, an agricultural meteorologist said. Courtesy Reuters
Published in ZaraiMedia.com