Chicago | Reuters — U.S. wheat futures climbed to their highest in six trading sessions on Thursday as expanding dryness in the southern Plains hard wheat belt triggered a round of short-covering, traders and analysts said.
Traders were also concerned about a threat of flooding in the Mississippi River Delta region, which grows soft red wheat, the type traded at the Chicago Board of Trade.
Soybean futures rose while corn ended nearly unchanged.
At the CBOT, May wheat settled up 9-1/2 cents at $4.59-3/4 per bushel after reaching $4.62 (all figures US$), the contract’s highest since Feb. 23.
May soybeans finished 2-1/4 cents higher at $8.63-3/4 a bushel and May corn ended up 1/4 cent at $3.56-1/2 a bushel.
Commodity funds hold a near record-large net short position in CBOT wheat, leaving the market vulnerable to short-covering rallies.
The market rose on concerns about dry conditions in the southern Plains. The weekly U.S. Drought Monitor, released on Thursday by a consortium of climatologists, showed that 21 per cent of Oklahoma, the No. 3 winter wheat state last year, was “abnormally dry,” up from one per cent a week ago.
Forecasts called for only limited rains in the next two weeks.
“The area lacking moisture in the southwestern belt will expand from one-quarter of the belt currently to one-third of the wheat area during that time, as above-normal temperatures accelerate the drawdown of moisture supplies,” the Commodity Weather Group said in a daily note.
A storm next week will miss the driest areas of the Plains and instead soak soft red winter wheat areas of the southern Midwest and the Delta, the firm said, causing “localized flooding.”
Farmers in that area may look to tear up soft red winter wheat fields and plant spring crops instead, said Jim Sullivan, executive vice-president with the Leese Trading Group.
“Our concern is less SRW (soft red winter) acres because given the low prices, the farmer is not going to stay with the crop very long,” Sullivan said.
CBOT soybeans firmed on bargain buying a day after the May contract held above chart support at $8.56. But plentiful world soy supplies and pressure from the expanding Brazilian harvest curbed the rally.
Corn was choppy, with the May contract dipping to a fresh seven-week low at $3.54-1/2 a bushel, just above its life-of-contract low at $3.54-1/4, before settling higher.
The market struggled to rally despite the U.S. Department of Agriculture reporting weekly export sales of U.S. old-crop corn at nearly 1.1 million tonnes, the most in a month.
— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Colin Packham in Sydney and Sybille de La Hamaide in Paris.