Chicago | Reuters — Chicago Board of Trade wheat futures rallied on Thursday for the second time in three days, hitting their highest in more than a week as investors scrambled to unwind short positions, traders said.
The short squeeze came as the winter wheat crop in the U.S. has been breaking dormancy.
“I think you have got a lot of people… leaning the wrong way,” said Jim Gerlach, president of A/C Trading in Indiana. “This is when the crop can go bad on you. Why be near-record short going into the risk season?”
Short-covering also supported corn futures amid concerns that cold soils and muddy fields could hamper farmers’ early planting efforts. The weather also might limit growers’ ability to add much-needed fertilizer to corn fields ahead of planting.
Soybean futures settled lower on uncertainty about a trade deal with China, the biggest export market for the oilseed. Soybeans had traded higher during the session but turned negative after hitting a one-week high.
President Donald Trump said on Thursday the U.S. was doing very well in trade talks with China, but that he could not say whether a final deal would be reached.
Chicago Board of Trade May soft red winter wheat futures ended up 5-1/2 cents at $4.52-3/4 a bushel (all figures US$). The most-active contract peaked at $4.60-3/4, its highest on a continuous basis since March 5.
Wheat touched a 13-month low on Monday, then rebounded nearly six per cent the following day in its biggest daily gain in seven months, before easing back again on Wednesday.
Investment funds are holding large short positions in wheat, making the market prone to abrupt movements.
“Their (funds’) net short position remains very important, which would inevitably lead to important purchases, or ‘short covering’, at the slightest climatic incident,” consultancy Agritel said.
CBOT May corn settled up 3-3/4 cents at $3.70-1/4 a bushel and CBOT May soybeans were 2-1/2 cents lower at $9.02 a bushel.
Weekly U.S. soybean exports of 1.915 million tonnes were near the top end of expectations, after large sales to China reported in recent days, according to a U.S. Agriculture Department report released on Thursday morning.
The market shrugged off disappointing export figures for wheat and corn.
Wheat export sales came in at 346,000 tonnes, below forecasts that ranged from 450,000 to 750,000 tonnes, while corn export sales of 846,600 tonnes were near the low end of trade forecasts.
— Reporting for Reuters by Mark Weinraub in Chicago; additional reporting by Naveen Thukral in Singapore and Gus Trompiz in Paris.