US MIDDAY: wheat rises

US wheat futures rose on Monday on a mild wave of technical buying and worries about crop development in the parched US Plains, traders said. Concerns about tightening global supplies due to adverse weather conditions in key growing areas around the globe also boosted wheat futures.
"We are getting a little bit of a technical bounce here today," said Shawn McCambridge, grains analyst with Jefferies Bache. "We started to getting into a little into the oversold side of the market after recent losses." Soybeans were lower, pressured by forecasts for beneficial weather in South American growing regions as well as expectations for a boost to official estimates of the US harvest.
Corn was close to unchanged, buffeted by the gains in wheat and the drop in soybeans. At 10:05 am CST (1605 GMT), Chicago Board of Trade December wheat futures were up 6-1/2 cents at $8.71 a bushel. CBOT January soybeans were 11-1/2 cents lower at $15.15-1/4 a bushel. The front-month November contract, which is more thinly traded than January futures, hit a 2-1/2 week low of $15.09 early in Monday's session.
CBOT December corn was up 3/4 cent at $7.40-1/4 a bushel. The benchmark December wheat contract received support after briefly dipping below its 100-day moving average of $8.64. It has not closed below that key technical level since June 18. Wheat fell 4.2 percent in October, its biggest monthly decline since November 2011, which has sparked some bargain buying in recent days.
"Aussie analysts continue to lower crop expectations as the country's harvest is just 10 percent complete," commodity brokerage INTL FCStone said in a research note to clients. "Dryness through the growing season and uncooperative weather into the harvest are burdening their producers."
Choppy, range-bound trade in all three commodities was expected in advance of the US Agriculture Department's monthly supply and demand report due on Friday. Traders also were reluctant to stake out new positions ahead of the US presidential election on Tuesday, analysts said.
Forecasts for the corn crop were expected to stabilise after falling sharply during the past four months due to the severe drought that withered crops around the US Midwest during the summer. The drought sent corn prices to a record $8.43-3/4 per bushel in early August. Prices have fallen more than 12 percent since that time as harvest reports have topped the lowered expectations.
The USDA's October report pegged the US corn crop at 10.706 billion bushels, the smallest in six years. USDA's estimates for the crop have fallen in its last four reports after the government forecast at 14.790 billion bushel harvest in May and June. USDA's latest soybean production estimate was 2.860 billion bushels, up from its September outlook but still well below the forecast for 3.430 billion bushels that the government gave in June.
Dry weather remains an issue in the US Plains hard red winter wheat region, said John Dee, meteorologist for Global Weather Monitoring. "The bottom line is there is not much precipitation seen for western Kansas, Oklahoma or Texas."
More rains are forecast for Australia, the world's second-largest exporter, which could further slow the harvest. "The supply outlook is continuing to deteriorate for Australia. Importers are looking more to Europe and the US," said Erin FitzPatrick, an analyst at Rabobank, said.
Improving weather is seen for key South American corn and soybean areas over the next week to 10-days, Dee said. "Overall it's a pretty good picture for Argentina and Brazil," he said. Areas that have been excessively wet in Argentina and southern Brazil are expected to begin drying down and the dry areas in most of northern Brazil are beginning to receive timely rains, Dee said. "All-in-all it's a pretty encouraging forecast for South American growing regions but not perfect," he said.