US grains staged a sharp rally on Tuesday amid a fresh inflow of investment money near month's end, with wheat posting its biggest daily gain since September on a sharply reduced assessment of the fledgling Plains wheat crop. Record-low wheat condition ratings due to very dry soils underlined supply fears following a string of weather-reduced harvests around the world.
Corn and soyabean futures notched their largest gains in at least a month. Traders said investment funds bought the most contracts in those markets since October 18. "You had a market that was a little asleep and we had some fresh buying coming on," said Sterling Smith, market strategist at Citigroup in Chicago. "You have enough concerns to get a weather story going even though (troubled growing conditions are) not centred in one place."
Wheat and corn futures changed hands at the highest prices in about two weeks while soyabeans hit their highest point so far this month as traders covered short positions, bracing for more gains on fears that crop yields in the United States, South America and Australia may miss expectations.
Wheat gained for a sixth straight session, its longest rally in four months, while soyabeans rose for a third consecutive session. The markets were also buoyed by news that euro zone countries and the International Monetary Fund clinched an agreement on reducing Greece's debt in a breakthrough to release urgently needed loans. Benchmark hard red winter wheat futures rose the most at 3.5 percent. Kansas City Board of Trade HRW wheat posted its largest premium since November 6 over the more widely traded Chicago Board of Trade wheat contract.
"Because of the drought conditions in the hard red winter wheat producing states here in the US, we finally decided yesterday to buy KC hard red winter wheat and to sell Chicago 'soft' red," analyst Dennis Gartman said in a note to clients. KCBT December wheat rose 31-1/2 cents to $9.15-1/4 per bushel while CBOT December wheat climbed 24 cents to $8.73. KCBT wheat for July delivery, the first contract to reflect harvest of the emerging crop, hit a premium of 55-3/4 cents per bushel above new-crop Chicago July wheat, a record wide spread for those contracts.
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