U.S. grains: Corn firms on short-covering at month’s end

Chicago | Reuters — U.S. corn futures rose on Thursday as fund-driven short-covering at the end of the month overshadowed disappointing export sales data, analysts said.

Wheat futures on the Chicago Board of Trade ended mostly lower, with nearby contracts pressured by heavier-than-expected deliveries against the December contract on first notice day.

Soybeans fell, led by soyoil after the U.S. Environmental Protection Agency’s 2019 blending requirement for soy-based biodiesel fuel remained unchanged from 2018.

CBOT March corn futures settled up 2-1/4 cents at $3.55-3/4 per bushel (all figures US$). CBOT March wheat ended down 1-3/4 cents at $4.33 a bushel while January soybeans fell 6-3/4 cents at $9.85-3/4 a bushel.

Corn firmed for a second straight session. Commodity funds hold massive net short positions in both corn and wheat, leaving those markets vulnerable to short-covering rallies.

“We’ve rebounded nicely, despite the lack of any news or the appearance of export demand. It’s fund short-covering that has given us a rally here,” said Brian Hoops, president of Midwest Market Solutions.

The U.S. Department of Agriculture reported export sales of U.S. corn in the latest week at 599,200 tonnes, below a range of trade expectations for 700,000 to 1,100,000 tonnes.

Weekly wheat sales totaled 187,400 tonnes (old- and new-crop years combined), also below expectations.

However, through its daily reporting system, the USDA said private exporters sold 110,000 tonnes of U.S. sorghum to China, a factor that lent support to corn futures. Sorghum competes with corn as a feed grain.

“It just shows Chinese demand for grains is greater than what people anticipated,” Terry Reilly, senior commodity analyst with Futures International, said of the sorghum sale.

For soybeans, weekly U.S. export sales totaled 942,900 tonnes, in line with trade expectations. But CBOT soybean futures fell on pressure from beneficial rains in Argentina’s crop belt, and the EPA’s biofuel mandates.

The EPA set a 2019 target for soy-based biodiesel at 2.1 billion gallons, unchanged from 2018, a factor that disappointed those hoping for an increase.

CBOT benchmark January soyoil futures climbed to a near two-week high of 34.68 cents/lb. in early moves, but turned lower after the EPA’s announcement, settling at 33.85 cents.

“The bull traders didn’t get what they wanted, which was a higher mandate set by the EPA for 2019 biodiesel,” Reilly said.

— Julie Ingwersen is a commodities correspondent for Reuters in Chicago; additional reporting by Naveen Thukral in Singapore and Gus Trompiz in Paris.

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