CHICAGO: US wheat futures jumped to a two-month high Tuesday on a mix of technical buying on the first day of the new month and worries about crop prospects in the breadbasket of the southern Plains, analysts said.
Corn also hit multi-month highs and soybeans followed as soymeal futures surged to contract highs across the board.
Chicago Board of Trade July wheat settled up 18-3/4 cents, about 3.7 percent, at $5.29-1/4 per bushel. July corn ended up 5 cents at $4.05-3/4 a bushel and July soybeans rose 4-3/4 cents at $10.53-1/4 a bushel.
Wheat posted the biggest advance on a percentage basis, driven by short-covering and uncertainty about the size of the US winter wheat crop. Commodity funds hold a net short position in CBOT wheat futures, leaving the market vulnerable to short-covering rallies.
Traders were monitoring the Wheat Quality Council’s annual Kansas crop tour, which began scouting fields on Tuesday. Wheat plants were short and immature and soils were dry in northern Kansas, the biggest US wheat state, scouts on one leg of the tour found.
“Estimated (Kansas) yields are highly variable, but the overall picture being presented is one of a crop that is very delayed and that has significant problems,” INTL FCStone chief commodities economist Arlan Suderman said in a client note.
CBOT July corn hit its highest since August, buoyed by what appeared to be fresh fund investment at the start of the month, at a time when US farmers are struggling to get crops seeded.
The USDA said 17 percent of the US corn crop had been planted by Sunday, behind the five-year average of 27 percent.
The USDA has projected that US farmers will seed 88 million acres of corn, down 2 percent from a year ago.
Traders also eyed weather in Brazil, where the country’s second-crop corn is developing amid stressful dry conditions. A shortfall there could imply increased export demand for US grain.
“With the issues down in South America, maybe we need more than 88 million (US corn) acres,” said Ted Seifried, analyst with Zaner Ag Hedge.
CBOT soybeans followed strength in soymeal tied to problems in Argentina, the world’s top soymeal supplier. In addition to a drought that slashed soy yields, a cargo ship collided with a dock in the grains hub of Rosario last week.
“Argentina’s logistical issues remain somewhat influential … How long the repairs will take still seems unclear to the market,” Commonwealth Bank of Australia analyst Tobin Gorey said in a market note.
Source: Brecorder
