US wheat futures rose on Tuesday as traders scrambled to cover short positions while corn and soyabeans pared gains due to a surging dollar, after rising in early trade. Corn and soya also received support from concerns about weather in South America limiting the size of harvests in agricultural powerhouses Brazil and Argentina. Chicago Board of Trade wheat futures were the biggest gainer as a wave of short covering boosted prices that have fallen 11 percent in the past month.
"I think a lot of people that have been short wheat are beginning to cover those short positions," said Al Kluis, president of Kluis Commodities, a market advisory service. "Some of the people that made a lot of money in the short side, I would think they would want to take it between now and the end of the year." Fears of downgrades to the debt ratings of eurozone countries kept weighing on the market, as did a rising global grain supply.
European shares rebounded and the euro steadied after steep selloffs, but investors remained nervous about the prospect of mass eurozone sovereign downgrades by credit rating agencies. At 10:14 a.m. CST (1610 GMT), CBOT March soft red winter wheat was up 6-1/2 cents to $6.00-3/4 a bushel. Expiring December wheat rose 10 cents to $5.85-1/2.
CBOT January soybean futures gained 2-1/2 cents to $11.14-1/2 a bushel. CBOT March corn rose 1 cent to $5.95 a bushel. The front-month December contract, which expires this week, gained 1 cent to $5.86-1/2 a bushel. The Brazil soya crop will turn out 73.1 million tonnes in the 2011/12 season, consultancy AgRural said, half a million tonnes less than its November view, due to the smaller area it now expects to be planted.
Planting of the new crop is winding down across Brazil's centre-west and southern soya belt. Rains started off steady across the entire soya belt in October but have been lower than average in the southernmost producer state of Rio Grande do Sul in the past weeks. "So far, the expectation was that Brazil would for the first time dethrone the US as the biggest supplier on the world market in the current year 2011/12," Commerzbank analysts said in a note.
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