CHICAGO: Chicago Board of Trade wheat rose more than 2 percent Wednesday on concern about poor US crop weather and expectations of strong global demand for US supplies after prices fell to a nine-month low earlier this week.
Corn was choppy and trying to stabilize after three straight losing sessions following last week's US Department of Agriculture (USDA) report, which surprised investors with estimates of big US corn and wheat stockpiles.
Soybeans fell on worries that feed demand in China might be slowing with a new avian flu strain emerging, and as traders unwound long soy/short corn spread positions.
At the CBOT as of 12:45 p.m. CDT (1745 GMT), May wheat was up 18-1/2 cents at $6.89-1/4 per bushel. May corn was down 1-3/4 cents at $6.38-3/4 a bushel and May soybeans were down 15-1/2 cents at $13.78-1/2 a bushel.
Wheat rose in part on concerns about dry conditions in the southern US Plains. Welcome rains are forecast for the region this week but may miss the southwestern portion of the belt.
Expectations that the sharp drop in CBOT wheat prices this week could trigger export demand added support. Also, China's state-owned agricultural trading company, COFCO, has complained about the baking performance of some Canadian spring wheat shipments and suggested it may import more US wheat instead.
"US wheat is supposedly the cheapest in the world, even cheaper than Australian. A combination of those things, with the funds being short, has made wheat the upside leader," said Jim Gerlach, president of A/C Trading in Fowler, Indiana.
Cold weather in Europe lifted European wheat futures. A wave of cold weather across France in recent weeks could hit grain crop yields by 5 to 6 percent if it lasts beyond mid-April, a scientist at the French National Institute for Agricultural Research said.
CORN TURNS LOWER IN CHOPPY TRADE
CBOT corn turned lower on choppy trade as the market struggled to find its footing after plunging roughly $1 per bushel, or 13 percent, since USDA's blockbuster quarterly stocks report last week.
The government pegged US corn stocks as of March 1 at 5.4 billion bushels, well above the average analyst estimate of about 5 billion. Stocks of soybeans and wheat also came in above expectations, and the USDA said farmers would plant the most acres to corn since 1936.
Commodity funds sold an estimated 81,000 corn contracts in the three sessions after the report's release, and open interest in CBOT corn fell by more than 40,000 contracts this week. By Wednesday, fund liquidation appeared to have slowed but continued to hang over the market.
"With wheat being 10 to 20 cents higher, I am shocked that corn is not higher. It tells you there is still massive length in that market that has to get cleaned up," said Mark Schultz, analyst at Norhtstar Commodity in Minneapolis.
Bearish moves in corn options pressured values. Traders said Rand Financial bought at least 3,500 December $4 corn puts. CBOT December corn, which represents the 2013 US harvest, was trading at $5.35-1/2 a bushel, but some analysts have said the contract could drop to around $4 if favorable summer weather results in a record-large crop.
Also, private analytics firm Informa Economics raised its estimates of 2012/13 corn production in Argentina and Brazil and 2013/14 production in China.
Informa estimated Brazil's 2012/13 corn crop, which is currently being harvested, at 71.95 million tonnes, up from 71.6 million previously, and Argentina's corn harvest at 25.3 million tonnes, up from 25.0 million previously.
The firm raised its forecast for China's 2013/14 corn production to 213 million tonnes, from 205 million previously, citing an increase in expected plantings.
SOYBEANS SAG ON WORRIES ABOUT BIRD FLU
Soybeans fell on seasonal pressure from the expanding soy harvest in Brazil and Argentina, as well as concerns about feed demand in China, the world's top soy buyer.
Chinese state media on Wednesday announced two more cases of a new strain of bird flu, including one death, bringing to nine the number of confirmed human infections from the previously unknown flu type.
Most-active September soymeal futures on China's Dalian exchange fell 2 percent amid worries that the flu could lower demand for poultry feed.
"There is a lot of uncertainty with this avian flu, this new strain in China, (and) fears that, due to poor livestock margins in China, they might not use as many soybeans as the USDA is stating," Gerlach said.
Soybeans have also gained relative to corn since last week's USDA stocks report, a factor that prompted some traders to take profits by exiting long soy/short corn spreads.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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