U.S. grains: Soybeans extend gains on fund buying

Chicago | Reuters — U.S. soybeans shrugged off early losses to surge two per cent on Wednesday, hitting new eight-month highs and extending the gains of a dramatic April rally linked to investment fund buying and rain-related delays in Argentina’s harvest.

Chicago Board of Trade soybeans reached the psychological threshold of $10 per bushel for the first time since before last year’s autumn U.S. harvest, as investors added to long bets in record-large volume and open interest (all figures US$).

“They tried to break it early and they couldn’t, and then we got follow-through buying,” said Lee Gaus, a partner at brokerage EFG Group in Chicago.

Wheat and corn futures also were sharply higher. Corn has declined in only one of 14 sessions this month, gaining more than 13 per cent over that stretch. Wheat has risen nearly 10 per cent this week, its largest such rally since June.

The higher grain and oilseed prices came as other commodities such as crude oil have also climbed. The Thomson Reuters Core Commodity Index hit a four-month peak.

“The wheat market has been lagging and is playing catch up now,” Gaus added.

CBOT May soybeans finished up 24-1/4 cents to $10.09-3/4 per bushel, extending the two-week rally to about $1.

CBOT May wheat was 18 cents higher at $5.04-1/4 per bushel and CBOT corn up 10-1/4 cents at $3.94-3/2, its highest level since Nov. 4.

Investment funds bought as many as 45,000 corn contracts, 30,000 soybean contracts and 18,000 wheat contracts, trade sources said.

Analysis firm Lanworth, a unit of Thomson Reuters, slashed its forecast for Argentina’s soybean production by one per cent to 62.7 million tonnes due to rainfall at harvest time. The U.S. Department of Agriculture’s forecast is for 59 million tonnes.

“At this point in the season, we usually have 40 per cent of the soy crop harvested. As of today, only 10 per cent has been brought in. The delay in harvesting is the worst in 10 years,” said German Heinzenknecht, meteorologist with consultancy Applied Climatology.

Lanworth also lowered its outlook for Brazilian corn output, in part because of dry conditions ahead of pollination. Brazil’s government on Tuesday eliminated an import tax on corn from outside the Mercosur trade bloc, potentially clearing the way for imports of U.S. corn.

“If we’re supposed to get this extra Brazil (corn) business that’s coming, we have to get it out of the farmers’ hands,” Scott Capinegro, broker at Highground Trading, said of the gains in corn.

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

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