U.S. grains: Corn, wheat extend gains on technical buying

Chicago | Reuters –– U.S. corn and wheat rose on Friday, extending steep gains from the previous session on technical buying while soybeans jumped to a one-month high on large export sales of soybeans to China.

Thursday’s rally in grains at the Chicago Board of Trade was tied to a steep drop in the dollar, which eased from a 12-year high against a basket of currencies. The dollar firmed on Friday following a better-than-expected U.S. jobs report, but grain prices continued to rise, with wheat rebounding from a 5-1/2-year low reached earlier this week.

“Much of what we are seeing is technical short covering,” Karl Setzer, analyst at MaxYield Cooperative said in a note to clients.

Some investors were taking profits on earlier short, or bearish, positions. Traders also were squaring their books ahead of a U.S. Department of Agriculture monthly supply and demand report due on Wednesday, in which the government is expected to slash its soy supply forecast and boost its corn and wheat supply outlook, a Reuters analyst poll showed.

Open interest in wheat futures tumbled by 10,000 contracts during Thursday’s rally, which was the biggest in a month, suggesting the investor short covering.

CBOT wheat for March delivery settled 5-3/4 cents higher at $4.84-1/2 cents and CBOT March corn up 4-1/2 cents to $3.81-1/2, highest since Nov. 9 (all figures US$).

For the week, wheat gained 1.1 per cent, snapping a streak of three weekly losses, while corn jumped 4.7 per cent for its biggest weekly gain since September.

Soybeans for January delivery finished 8-1/2 cents higher at $9.06 per bushel, with prices further supported by surging soyoil futures on bets of increased demand for use in U.S. biodiesel.

Soybean prices rose 3.8 per cent for the week, the most since July.

USDA earlier said exporters had sold 427,000 tonnes of U.S. soybeans within the previous 24 hours, more than half to top importer China and the remainder to unknown destinations.

“The overnight sales are a good sign that the Chinese are still here, and they haven’t stopped buying,” said Rice Dairy analyst Jerry Gidel.

Michael Hirtzer reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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