Chicago | Reuters — U.S. grain futures jumped on short-covering and technical buying on Tuesday, with soybeans closing at eight-month highs after a see-saw session.
Heavy buying by commodity investors helped drive the gains, with funds snapping up an estimated 15,000 soybean contracts and 20,000 corn contracts at the Chicago Board of Trade, traders said.
Prices for the oilseed surged in the last 30 minutes of trading after temporarily slipping lower following the release of a U.S. Department of Agriculture crop report that showed global inventories remain ample.
“It’s a report with no new bullish news and it’s a market that’s mature here at the top,” said Don Roose, president of Iowa-based broker U.S. Commodities.
May soybeans ended up eight cents at $9.36-1/4 a bushel (all figures US$). That was near the session peak of $9.38-3/4, the highest for the most-active contract since Aug. 12.
Most-active May corn gained six cents to $3.62-3/4 a bushel, and May wheat rose 5-1/4 cents to $4.52-1/2 a bushel at the CBOT.
The rallies prompted some farmers, who are hurting from low grain prices, to sell crops that have been in storage since last year’s harvests. Corn futures have dropped by 57 per cent since 2012 because of increasing supplies, and U.S. farmer income this year is expected to reach its lowest since 2002.
Helping to drive futures prices higher were advances in crude oil and the broader commodities sector, traders said. The 19-commodity Thomson Reuters/Core Commodity CRB Index rose 2.13 per cent.
A rise in Brazil’s currency also lent support to the farm markets because a stronger real makes exports less attractive in local currency terms, traders said. Brazil is the world’s top soybean supplier and competes with the U.S. for export business.
In Argentina, the world’s No. 3 soybean exporter and the leading supplier of soyoil and soymeal, downpours have ruined the harvests of nearly five per cent of the country’s soybean farms.
Traders will watch weather conditions there amid concerns that rains could damage even more of the 2015-16 crop if they extend into next week as expected. Grain experts still forecast a strong harvest, however, because of robust production in regions unaffected by the precipitation.
USDA, in its monthly supply and demand report, raised its estimate for Argentina’s soybean crop by 0.8 per cent to 59 million tons.
— Tom Polansek reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Michael Hirtzer and Karl Plume in Chicago, Nigel Hunt in London, Naveen Thukral in Singapore and Michael Hogan in Hamburg.