U.S. grains: Wheat surges as USDA cuts acreage view

Chicago | Reuters — U.S. grain prices rallied on Tuesday after the U.S. Department of Agriculture slashed its estimate of winter wheat seedings by more than anticipated and unexpectedly cut its corn and soybean production view.

Wheat futures surged nearly three per cent to a three-week high on fund short covering while corn and soybeans gained about two per cent despite still-large U.S. stockpiles of the crops.

“The most bullish number today was the winter wheat seeding here in the U.S. That number was below even the lowest of the average trade guesses,” said Jim Gerlach, president of A/C Trading.

Chicago Board of Trade March wheat gained 12-1/4 cents, or 2.6 per cent, to $4.81-1/4 a bushel, the strongest percentage increase in nearly three months (all figures US$). March hard red winter wheat surged 18-1/2 cents, or four per cent, to $4.80-3/4.

CBOT March corn jumped five cents, or 1.4 per cent, to $3.56-3/4 a bushel in the steepest rally since Dec. 10.

CBOT March soybeans added 13-1/4 cents, or 1.5 per cent, to $8.74-1/2 a bushel, the contract’s strongest gains in 3-1/2 weeks.

Commodity funds bought an estimated net 12,000 corn contracts, 10,000 soybean contracts and 9,000 wheat contracts on the day, trade sources said.

The futures market was ripe for a rally due to the unusually large net short position currently held by speculative investors.

The latest Commodity Futures Trading Commission (CFTC) data showed non-commercial traders held their largest-ever net short position in CBOT wheat and soybeans and the largest net short in corn since late 2013.

USDA on Tuesday pegged U.S. winter wheat seedings at 36.609 million acres, down 7.2 per cent from a year earlier.

“Basically, it puts U.S. winter wheat production around 1.2 billion bushels, which would be the lowest we’ve seen since 2002,” said Terry Reilly, senior commodities analyst with Futures International.

Wheat prices had dropped to a five-year low last week, pressured by huge global stockpiles.

Corn remained anchored by abundant stocks as USDA estimated the U.S. Dec. 1 supply at the largest ever and cut its 2015-16 season U.S. export forecast by 50 million bushels.

Soybean prices also were capped by large stocks in the U.S. and globally as South American producers Brazil and Argentina are harvesting another bumper crop. The USDA did not adjust its production views for either country despite periods of poor weather this season.

Brazil’s government crop supply agency Conab on Tuesday trimmed its 2015-16 soy crop outlook slightly to 102.1 million tonnes, which would still be the largest ever.

Karl Plume reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting by Colin Packham in Sydney, Sybille de La Hamaide in Paris and P.J. Huffstutter in Chicago.

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