Chicago | Reuters –– U.S. grain and soybean futures rebounded from early-session losses on Wednesday in a technical short-covering bounce as investors squared positions ahead of a U.S. Department of Agriculture crop report due early next week.
Corn and wheat futures posted fresh contract lows in nearly all months and soybeans hit a 6-1/2-week low before recovering.
“We’re seeing some short covering now that, technically, support levels have held and we’ve got a major report that’s coming out in less than a week,” said Steve Georgy, vice-president of consultancy Allendale Inc.
Chicago Board of Trade March soybeans rose 7-1/2 cents, or 0.9 per cent, to $8.64-3/4 a bushel after falling as low as $8.52 a bushel (all figures US$). CBOT March corn was up 1/4 cent at $3.53-1/4 a bushel after posting a contract low of $3.50-1/4 earlier in the day.
Corn held above a key technical support level of $3.50 a bushel and soybeans held above support at $8.50 a bushel, Georgy said.
USDA is scheduled to release its annual crop production report on Jan. 12 and the market is prone to bouts of short-covering by funds, which are holding very large short positions in grains, he added.
Expectations for bumper South American crops restricted gains in corn and soybeans, along with declines in key markets, including crude oil.
Private analytics firm Informa Economics on Wednesday raised its estimate of Argentina’s 2015-16 corn production but left its forecast of the country’s soybean crop unchanged, trade sources said. Informa also left unchanged its Brazilian corn and soy production forecasts and reduced its outlook for India’s wheat crop.
CBOT March wheat gained 1-1/2 cents, or 0.3 per cent, to $4.62-3/4 a bushel after hitting a session low of $4.56-3/4, within 3/4 cent of its contract low. All other traded months posted contract lows.
Concerns that adverse weather in the hard and soft red winter wheat belts of the U.S. could reduce yields underpinned wheat futures, although gains were tempered by slow export demand for U.S. supplies.
“The wheat weather is still problematic. The soft red wheat hasn’t fully priced in the damage done last week by the floods and there’s a drier pattern in the hard red wheat belt of the southern Plains in the most recent weather models,” said Mike Zuzolo, president of Global Commodity Analytics.
— Karl Plume reports on agriculture and ag commodity markets for Reuters from Chicago.