CHICAGO: US wheat futures climbed nearly 3 percent on Wednesday, their biggest daily rise since April, on buying and expectations of domestic demand for wheat as livestock feed, traders said.
Corn and soybeans also advanced, led by new-crop contracts as forecasts for hotter, drier weather later this month in the US Midwest raised concerns about potential crop stress.
At the Chicago Board of Trade, July wheat settled up 19.5 cents, or 2.8 percent, at $7.07 per bushel.
July corn ended up 9 cents at $6.82-1/4 a bushel, with new-crop December up 20 cents at $5.70-1/2.
July soybeans rose 12-1/4 cents at $15.23 a bushel and new-crop November ended up 21 cents at $13.10-3/4.
Wheat gained against corn as inter-market spreads corrected. Corn had risen against wheat in recent days, making wheat more attractive as a feed ingredient.
"When you've stretched corn against wheat as far as you have, you have also encouraged additional domestic feed use in the wheat market. So we probably have some renewed interest from the feed sector," said Terry Linn, analyst with the Linn Group, a Chicago brokerage.
Commodity funds hold a sizable net short position in CBOT wheat futures, leaving the market open to bouts of short-covering that can accelerate market moves.
Also bullish, China made a rare purchase of about 200,000 tonnes of wheat from France, European traders said. The last time China made a significant purchase of French wheat was in the 2004/2005 season, when it bought 667,358 tonnes, data from French farm office FranceAgriMer showed.
Some analysts said the US winter wheat harvest might be smaller than expected, following drought and spring freeze damage in the US Plains and excessive rain in the Midwest.
Farmers have been harvesting wheat in Texas and Oklahoma and while early yield reports were not as bad as expected, grain merchants have expressed concern that the remaining crop might be worse.
"I think the trade is starting to find more disappointing yields that match up with the declining crop conditions. They are having to put premium back in the market," said Mike Zuzolo, president of Global Commodity Analytics in Lafayette, Indiana.
CORN UP ON WEATHER JITTERS
Nearby corn futures rose for a fourth straight session, supported by firm cash markets, while back months advanced as forecasts for hot weather in the US Midwest evoked memories of last year's historic drought.
New-crop December corn hit a two-week high at $5.71, surging above its 100-day moving average of $5.51.
"There is discussion of a high-pressure ridge for the last week of June and into July that is gaining momentum," Joe Davis, a vice president with Futures International, wrote in a note to clients. "The warm and dry weather may help crops in the short-term, but traders will keep a close eye on this as it may develop into a prolonged ridge," it said.
Short-covering and weather worries overshadowed a policy statement from the US Federal Reserve, issued 15 minutes before the CBOT close. The US dollar rose and equities fell after the Fed said it would maintain the pace of its bond buying and gave no explicit indication it was close to slowing the stimulus program.
The market also eyed weekly ethanol numbers released by the US Energy Information Administration. The agency reported that US ethanol output fell by 11,000 barrels per day in the latest week, to 873,000 bpd, while ethanol stocks rose to 16.45 million barrels, up 458,000.
Ethanol margins are still positive, traders said, a factor that should support demand for old-crop corn this summer.
SOYBEANS RISE ON ACREAGE ESTIMATE
New-crop soybeans extended gains after private analytics firm Informa Economics estimated US soybean plantings at 77.756 million acres (31.5 million hectares), down from its May forecast of 78.286 million but above the US Department of Agriculture's figure of 77.1 million.
"The new-crop beans have gotten a boost from the Informa numbers. The acreage increase was not as big as the trade was expecting," Zuzolo said.
The USDA was scheduled to release updated planting figures on June 28. Wet weather slowed US corn planting this spring, and analysts suspect farmers switched some of their intended corn acres to soybeans, which can be planted later.
As of Sunday, US farmers still had 15 percent of their soybean acres left to plant, the USDA said this week.
Earlier, Lanworth, a brand of Thomson Reuters, lowered its US 2013 soybean production estimate to 3.35 billion bushels, from 3.4 billion previously, and cut its yield forecast to 43.3 bushels per acre from 43.8.
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