GRAINS-Wheat up 3.8 pct as dry weather prompts short covering

Thu Apr 4, 2013 1:32am IST

* Export rumors, expectations of world demand lift wheat
    * Concerns over U.S. winter crop linger; funds cover shorts
    * Corn choppy, trying to stabilize after 13 percent plunge
    * Soy lower on uncertainty over avian flu in China

 (Updates with closing prices, adds wheat export rumors)
    By Julie Ingwersen
    CHICAGO, April 3 (Reuters) - Chicago Board of Trade wheat
jumped 3.8 percent Wednesday, its biggest daily rise in six
months, as concern about poor U.S. crop weather and expectations
of strong global demand for U.S. supplies sparked a flurry of
fund short-covering, traders said.
    Corn edged higher in choppy trade, stabilizing after three
straight losing sessions following last week's U.S. Department
of Agriculture (USDA) report, which surprised investors with
estimates of big U.S. corn and wheat stockpiles.
    Soybeans fell on worries that feed demand in China might be
slowing with a new avian flu strain emerging, and as traders
unwound long soy/short corn spread positions.
    At the CBOT, front-month May wheat settled up 25-3/4
cents at $6.96-1/2 per bushel, its biggest single-day rally
since Sept. 28.
    May corn ended 1 cent higher at $6.41-1/2 a bushel and
May soybeans finished down 13-3/4 cents at $13.80-1/4 a
bushel.
    Wheat rose in part on concerns about dry conditions in the
southern U.S. Plains. Welcome rains are forecast for the region
this week but may miss the southwestern portion of the belt.
    Expectations of fresh export demand in response to the sharp
drop in CBOT wheat prices this week to a nine-month low added
support.
    CBOT floor traders cited rumors that China's Sinograin
bought 10 cargoes of U.S. soft red winter wheat, but some
analysts were skeptical, noting that cash values for wheat at
the U.S. Gulf export terminal showed little change.    
    China's state-owned agricultural trading company, COFCO, has
complained about the baking performance of some Canadian spring
wheat shipments and suggested it may import more U.S. spring
wheat instead. 
    "U.S. wheat is supposedly the cheapest in the world, even
cheaper than Australian. A combination of those things, with the
funds being short, has made wheat the upside leader," said Jim
Gerlach, president of A/C Trading in Fowler, Indiana.
    CBOT traders estimated that commodity funds were net buyers
of 11,000 CBOT wheat contracts on Wednesday. Funds held a net
short position in CBOT wheat as of last week, data from the U.S.
Commodity Futures Trading Commission showed.
    Cold weather in Europe lifted European wheat futures. A wave
of cold weather across France in recent weeks could hit grain
crop yields by 5 to 6 percent if it lasts beyond mid-April, a
scientist at the French National Institute for Agricultural
Research said. 
    
    CORN ENDS FIRM IN CHOPPY TRADE
    CBOT corn settled higher after a choppy session as the
market tried to find its footing after plunging roughly $1 per
bushel, or 13 percent, since USDA's blockbuster quarterly stocks
report last week. 
    The government pegged U.S. corn stocks as of March 1 at 5.4
billion bushels, well above the average analyst estimate of
about 5 billion. Stocks of soybeans and wheat also came in above
expectations.
    Commodity funds sold an estimated 81,000 corn contracts in
the three sessions after the report's release, and open interest
in CBOT corn fell by more than 40,000 contracts this week. By
Wednesday, fund liquidation appeared to have slowed but
continued to hang over the market.
    "With wheat being 10 to 20 cents higher, I am shocked that
corn is not higher. It tells you there is still massive length
in that market that has to get cleaned up," said Mark Schultz,
analyst at Norhtstar Commodity in Minneapolis.    
    Light pressure stemmed from news that private analytics firm
Informa Economics raised its estimates of 2012/13 corn
production in Argentina and Brazil and 2013/14 production in
China. 
    Informa estimated Brazil's 2012/13 corn crop, which is
currently being harvested, at 71.95 million tonnes, up from 71.6
million previously, and Argentina's corn harvest at 25.3 million
tonnes, up from 25.0 million previously. 
    The firm raised its forecast for China's 2013/14 corn
production to 213 million tonnes, from 205 million previously,
citing an increase in expected plantings.
    
    SOYBEANS SAG ON WORRIES ABOUT BIRD FLU
    Soybeans fell on technical selling and concerns about feed
demand in China, the world's top soy buyer.
    Chinese state media on Wednesday announced two more cases of
a new strain of bird flu, including one death, bringing to nine
the number of confirmed human infections from the previously
unknown flu type. 
    Most-active September soymeal futures on China's Dalian
exchange fell 2 percent amid worries that the flu could
lower demand for poultry feed.
    "There is a lot of uncertainty with this avian flu, this new
strain in China, (and) fears that, due to poor livestock margins
in China, they might not use as many soybeans as the USDA is
stating," Gerlach said.
    Soybeans have also gained relative to corn since last week's
USDA stocks report, a factor that prompted some traders to take
profits by exiting long soy/short corn spreads.

    
 Prices at 2:27 p.m. CDT (1927 GMT)      
                              LAST      NET    PCT     YTD
                                        CHG    CHG     CHG
 CBOT corn                  641.50     1.00   0.2%   -8.1%
 CBOT soy                  1380.25   -13.75  -1.0%   -2.7%
 CBOT meal                  398.00    -4.10  -1.0%   -5.4%
 CBOT soyoil                 49.15    -0.44  -0.9%    0.0%
 CBOT wheat                 696.50    25.75   3.8%  -10.5%
 CBOT rice                 1565.00   -11.50  -0.7%    5.3%
 EU wheat                   240.50     3.75   1.6%   -3.9%
 
 (Additional reporting by Michael Hogan in Hamburg and Naveen
Thukral in Singapore; editing by James Jukwey, Jim Marshall and
Peter Galloway)
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