U.S. grains: Corn, wheat up as weather, currency spark short-covering

Hong Kong row tempers hopes of China demand for U.S. soy

CBOT July 2020 corn with 20- and 50-day moving averages. (Barchart)

Chicago | Reuters — U.S. corn futures jumped on Thursday to a five-week high as a weaker dollar, forecasts for hotter, drier weather in the Midwest corn belt and a further rebound in ethanol production triggered bargain buying and short-covering by managed funds.

Wheat futures also rallied on expanding dryness across the Plains wheat belt and on the weaker greenback, which makes U.S. shipments more attractive to importers.

Soybeans, however, drifted lower as escalating tensions between the United States and top soy importer China weighed on prices.

Chicago Board of Trade (CBOT) July corn futures rose seven cents to $3.27-1/2 a bushel, the highest since April 23 (all figures US$). The contract briefly traded above its 50-day moving average, a key technical level it has not breached since January.

CBOT July wheat jumped 10 cents to $5.14-1/2 a bushel, while July soybeans fell 1-1/2 cents to $8.47 a bushel.

“The corn market has a lot of fund shorts in it and some of the long-range weather forecasts are somewhat threatening,” said Jim Gerlach, president of A/C Trading. “Managed funds going into the corn growing season with their seventh largest net short position doesn’t make a lot of sense to me.”

Overly wet weather has stalled late-season corn planting in some areas of the Midwest, potentially triggering a shift in acres to more soybeans.

Meanwhile, sections of the central U.S. farm belt, including some winter wheat areas, are forecast to shift to a hotter, drier pattern over the next 10 days, according to meteorologists.

Corn drew some support from U.S. government data showing a fourth straight weekly increase in ethanol production and a drop in ethanol stocks to the lowest since January.

Rising U.S.-China tensions and China’s continued buying of Brazilian soy for shipment during the traditional U.S. export season weighed on soybeans.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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