Chicago | Reuters — U.S. soybean and corn futures climbed on Monday on short-covering and concerns that the weather in South America could hamper production of the crops in Brazil and Argentina.
Wheat rallied around two per cent as commodity funds exited short positions and on increasing worries that dry weather in the U.S. Plains could hurt winter wheat crops.
A firmer dollar offset some of the gains in grain markets following its plunge to a more-than-three-year low against a basket of currencies last week.
“We’re putting in some premium because Brazil is not able to harvest because of the rain and there are some crop quality concerns,” said Midwest Market Solutions president Brian Hoops.
“Meanwhile, it’s just too dry in Argentina,” he said. “That’s giving us support in soybeans, meal and, to a lesser extent, corn.”
Rain is expected in key crop regions of Brazil throughout this week, hampering the soybean harvest and delaying planting of winter corn in some areas.
Drought-hit Argentina received only scattered rain over the weekend, mostly in northern and central portions of the country, meteorologists said. They expect most crop areas to turn drier and warmer than normal this week.
The crop concerns triggered short-covering by commodity funds, which continue to hold large net short positions in soybean and grain markets, according to U.S. Commodity Futures Trading Commission data.
Chicago Board of Trade March soybeans were up six cents at $9.91-1/2 a bushel, while CBOT March corn gained 2-1/4 cents to $3.58-3/4 a bushel, an eight-week high (all figures US$). Buying accelerated as each of the actively traded contracts climbed above their 100-day moving averages, although March soybeans encountered chart based resistance around the $10 a bushel level.
CBOT March wheat jumped 8-1/4 cents, or 1.9 per cent, to an 11-week high of $4.49-1/4 a bushel, also breaching its 100-day moving average.
The U.S. Department of Agriculture on Monday reported nearly 580,000 tonnes of U.S. wheat were inspected for export last week, a six-week high that topped trade expectations.
Vast global supplies have hung over the wheat market, but investors’ large short positions have made it prone to weather-fuelled rallies.
After the risk of cold damage triggered a rally in early January, the market was focusing on the lack of moisture in parts of the Plains.
The U.S. Department of Agriculture is due to release updated crop condition ratings for winter wheat later on Monday.
— Karl Plume reports on agriculture and agribusiness for Reuters from Chicago; additional reporting by Naveen Thukral in Singapore and Gus Trompiz in Paris.