Chicago | Reuters — U.S. soybean and corn futures climbed to six-week highs on Tuesday on fund-driven buying as the grain complex shrugged off weakness in global equity markets and crude oil, traders said.
But wheat futures settled flat as all three commodities pared gains by the close.
At the Chicago Board of Trade, the March soybean contract settled up 5-1/2 cents at $8.86-1/4 per bushel after reaching $8.89-1/2, its highest since Dec. 22 (all figures US$).
March corn ended up 1-1/4 cents at $3.72-1/2 a bushel after touching $3.73-3/4, its highest since Dec. 22. And CBOT March wheat settled unchanged at $4.75-1/4 a bushel after reaching a one-week top at $4.83.
The advances came on a day when crude oil futures fell 5.5 per cent as hopes faded for a deal between OPEC and Russia on output cuts.
Commodity funds have been heavily net short in grains amid plentiful supplies and concerns about the health of the global economy. But that stance may be changing as some investors start to shift their focus to spring planting in the Northern Hemisphere, often a period of greater risk for agricultural futures.
“The food-based commodities are starting to separate themselves from the broader commodity complex, which still remains under significant pressure, led by crude oil,” said Arlan Suderman, chief commodities economist for INTL FCStone.
Wheat traders were monitoring developments in Egypt, where the main state grain buyer, the General Authority for Supply Commodities, canceled its latest wheat tender after it received no offers.
Egypt’s agricultural quarantine authorities have adopted a zero-tolerance policy on the grain fungus ergot, which is at odds with a limit allowed by state wheat buyer GASC. Traders say such a strict standard is unworkable.
GASC rejected a 63,000-tonne wheat shipment this week for containing traces of ergot. GASC on Tuesday said it was in talks to import three million tonnes of wheat outside the tendering process.
Egypt imports around 10 million tonnes of wheat each year, most of which goes to providing cheap, subsidized bread to feed its exploding population of 90 million.
“Clearly the Egyptian wheat issue is a live wire,” said Mike Zuzolo of Global Commodity Analytics. He added, “I don’t think the trade can make heads or tails of whether Egypt has money to pay for wheat, or whether Egypt has too tight requirements because they don’t want the wheat.”
–– Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Gus Trompiz in Paris.