U.S. grains: Wheat rallies to seven-month high after USDA data

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — U.S. wheat futures gained two per cent to a seven-month high on Thursday after the U.S. Department of Agriculture increased its export forecast and showed smaller-than-expected global supplies in a monthly report.

Chicago Board of Trade soybean futures fell and corn prices declined narrowly from an earlier seven-month peak in the wake of the USDA report in which the government also slashed its estimate for U.S. corn ending stocks and kept its U.S. soy supply forecast steady.

CBOT March wheat finished 11 cents higher at $4.43-1/2 per bushel, reaching the highest level on a continuous chart since June 29 (all figures US$). CBOT March soybeans settled down 8-1/4 cents at $10.50-1/2 per bushel. CBOT March corn was down 1-1/4 cents to $3.69-1/2, off its high of $3.72-3/4.

Wheat gained as investors exited short positions and also unwound long corn-short wheat spreads, traders said.

“Wheat’s the one on rock-bottom to begin with and you had everybody short so any kind of real or imagined bullish number in wheat is going to get a reaction,” said Jim Gerlach, president of A/C Trading.

USDA raised its U.S. wheat export forecast by 50 million bushels, citing a strong pace of U.S. wheat export shipments, which resulted in a reduction in ending stocks to 1.139 billion bushels, compared to analyst expectations for 1.186 billion.

“With the recent run-up in the beans relative to corn and wheat, we’re seeing massive unwinding of those spreads,” said Terry Reilly, senior commodities analyst at Futures International.

“People were looking for a larger cut in the Argentine crop and, more importantly, USDA did not really address the recent strength in U.S. demand, both domestically and the export side,” Reilly added on soybeans.

USDA cut Argentine soybean production to 55.5 million tonnes, down from 57 million in January but above the Rosario grain exchange estimate of 54.5 million tonnes on Wednesday.

USDA estimated Brazilian soy output unchanged at 104 million tonnes, compared to a forecast from Brazil’s Conab earlier on Thursday for a record of 105.6 million.

— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Karl Plume in Chicago, Naveen Thukral in Singapore and Gus Trompiz in Paris.

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