U.S. grains: Wheat rallies to highest since June 2016

Chicago | Reuters — Chicago Board of Trade wheat futures rallied 2.6 per cent on Friday to their highest in nearly a year, with concerns about shortfalls in the U.S. crop sparking a round of short-covering by investment funds, traders said.

Corn futures also were higher, but forecasts for rain in key growing areas of the U.S. Midwest limited buying. Soybean futures firmed as well, supported by technical buying and signs of strong demand.

Reports of disappointing yields in early harvest of the Plains hard red winter wheat belt underpinned the market.

“It is not that we have a disaster, but it’s not quite what people thought it was and the funds were caught short,” said Greg Grow, director of agribusiness at Archer Financial Services. Chicago Board of Trade soft red winter wheat for July delivery settled up 11-1/2 cents at $4.65-1/4 a bushel (all figures US$). The most-active contract peaked at $4.68-1/2 a bushel, the highest since June 27, 2016.

K.C. hard red winter wheat for July delivery, which tracks the crop currently being harvested in the U.S. Plains, was 8-1/4 cents higher at $4.73-1/2 a bushel. Hard red winter wheat peaked at its highest since March 7.

MGEX July spring wheat futures were 10-1/4 cents higher at $6.42-3/4 a bushel. MGEX wheat failed to break through the 2-1/2 year high hit earlier this week.

Forecaster Commodity Weather Group said that the rain outlook was still very limited in the western Dakotas and Montana during the next two weeks, which will hinder development of spring wheat in those areas.

Concerns about crops in the Black Sea region added support to wheat prices. Wheat exports from Russia, Ukraine and Kazakhstan were expected to fall 3.3 per cent to 50.4 million tonnes in the upcoming season, which starts on July 1, according to a Reuters poll. Production also was seen falling.

CBOT July corn futures were 4-1/2 cents higher at $3.84 a bushel.

“For the most part it’s still a warm but wet forecast for the Corn Belt,” ED&F Man Capital said in a note to clients. “Just what the crops need.”

CBOT July soybean futures were 4-1/4 cents higher at $9.39 a bushel.

Support for soybeans was noted at the 10-day and 20-day moving averages. Traders also said the monthly National Oilseed Processors Association report released on Thursday, which showed crushings well above analysts’ forecasts, was still adding strength to the soy market.

— Mark Weinraub is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Gus Trompiz in Paris.

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