U.S. grains: Prices rise on technicals, positioning before reports

(USDA.gov via Flickr)

Chicago | Reuters –– U.S. grain and soybean futures strengthened on Monday as technical buying and positioning ahead of U.S. crop reports overshadowed concerns about poor export demand.

Soybean oil neared a two-month high.

Traders were adjusting positions in the markets before the U.S. Department of Agriculture (USDA) issues reports on crop production, supplies and demand on Friday. Some analysts said the agency may cut its estimates for how many acres of soybeans and corn will be harvested this year due to unfavourable weather.

However, advancing U.S. harvests and sluggish export demand will limit gains until USDA resolves uncertainty over acreage in the monthly reports, said Rich Feltes, head of market insights for U.S. broker RJ O’Brien.

Chicago Board of Trade November soybeans jumped 1.1 per cent to $8.84-1/4 a bushel in a turnaround after the front-month contract dropped about 1.7 per cent last week (all figures US$).

December soybean oil ended up 2.1 per cent at 28.66 cents per pound after traded to 28.81, the contract’s highest price since Aug. 19. Spillover support from gains in the Malaysian palm oil and crude oil futures markets helped support the rally, traders said.

December corn gained 1.1 per cent to $3.93-1/2 a bushel after finishing last week near unchanged. December wheat edged up 0.4 per cent to $5.15-1/2 a bushel after rising more than one per cent last week. The market on Thursday touched its highest level in more than seven weeks at $5.23-3/4.

Commodity funds bought an estimated 7,000 soybean contracts, 6,000 contracts each of soybean oil and corn, and were even in wheat, traders said.

The U.S. continues to face intense competition over wheat exports from other countries offering cheaper supplies. Egypt, the world’s top wheat importer, bought 235,000 tonnes of Russian and Ukrainian wheat in a tender on Saturday.

“Adverse weather in Australia and Russia is supportive for the wheat market, but we expect prices to be range-bound because export demand for U.S. wheat is pretty quiet,” said Kaname Gokon at brokerage Okato Shoji in Tokyo.

The soybean market also faces headwinds from plentiful global supplies, which are providing stiff competition to U.S. exporters.

The U.S. soy harvest is probably about 41 per cent complete and the corn harvest is about 30 per cent complete, analysts said in a Reuters poll. USDA will provide its estimates in a weekly report due at 3 p.m. CT.

Tom Polansek reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Michael Hogan in Hamburg.

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