U.S. grains: Soybeans set 2016 high on short-covering, export demand

Chicago | Reuters — Short-covering and hopes for improved export demand lifted U.S. soybean futures to three-month highs on Friday, marking the longest rally for the market’s most active contract in four years.

Corn futures touched a two-week high on technical buying and export demand, capping the grain’s biggest weekly advance since December, while wheat futures snapped a seven-session rally after reaching a five-week peak.

The gains could prompt U.S. farmers to sell more of the soy and corn crops they put into storage following massive harvests last year, traders said.

Agricultural markets have slumped during the past three years due to increasing global supplies, and many farmers have been waiting for prices to rise before selling their inventories.

“We would use these short-covering rallies as selling opportunities,” said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage in Iowa.

May soybeans closed up 6-1/2 cents to $8.95-3/4 a bushel at the Chicago Board of Trade (all figures US$). The most actively traded contract reached $8.96-3/4 earlier in the session, the highest price since Dec. 7.

CBOT May corn rose 2-1/4 cents to $3.65 a bushel, with the most-active corn contract reaching its highest level since Feb. 25.

Commodity funds bought an estimated net 7,000 contracts each of soybeans and corn.

Strength in the Brazil real helped support the markets after the currency advanced to a six-month high against the dollar, traders said.

A stronger real could boost U.S. farm exports because the United States competes with Brazil for corn and soybean business on the world market, they said.

On Friday, the U.S. Department of Agriculture said Japan bought 170,800 tonnes of U.S. corn. A day earlier, the agency reported the largest weekly U.S. corn export sales since November.

In wheat, traders took profits after the CBOT market reached a five-week high amid concerns about dry weather in growing areas of the U.S. Plains.

Forecasts for record-large world wheat inventories, which pressed prices to multi-year lows early this month, weighed on the market.

“Any rally is struggling against price resistance from the size of U.S. stocks, which provides a significant cushion against perceived lower new-crop production,” said David Sheppard, managing director of UK merchant Gleadell.

CBOT May wheat ended down 1-1/4 cents to $4.75-3/4 a bushel. The most-active contract earlier traded to $4.78-1/2, its highest price since Feb. 4.

Tom Polansek reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Nigel Hunt in London and Naveen Thukral in Singapore.

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