US grain prices rallied on Tuesday after the US Department of Agriculture slashed its estimate of winter wheat seedings by more than anticipated and unexpectedly cut its corn and soyabean production view. Wheat futures surged nearly 3 percent to a three-week high on fund short covering while corn and soyabeans gained about 2 percent despite still-large US stockpiles of the crops.
"The most bullish number today was the winter wheat seeding here in the US That number was below even the lowest of the average trade guesses," said Jim Gerlach, president of A/C Trading. Chicago Board of Trade March wheat gained 12-1/4 cents, or 2.6 percent, to $4.81-1/4 a bushel, the strongest percentage increase in nearly three months. March hard red winter wheat surged 18-1/2 cents, or 4 percent, to $4.80-3/4. CBOT March corn jumped 5 cents, or 1.4 percent, to $3.56-3/4 a bushel in the steepest rally since December 10. CBOT March soyabeans added 13-1/4 cents, or 1.5 percent, to $8.74-1/2 a bushel, the contract's strongest gains in 3-1/2 weeks.
Commodity funds bought an estimated net 12,000 corn contracts, 10,000 soyabean contracts and 9,000 wheat contracts on the day, trade sources said. The futures market was ripe for a rally due to the unusually large net short position currently held by speculative investors.
The latest Commodity Futures Trading Commission (CFTC) data showed non-commercial traders held their largest-ever net short position in CBOT wheat and soyabeans and the largest net short in corn since late 2013. The USDA on Tuesday pegged US winter wheat seedings at 36.609 million acres, down 7.2 percent from a year earlier. Wheat prices had dropped to a five-year low last week, pressured by huge global stockpiles. Corn remained anchored by abundant stocks as USDA estimated the US December 1 supply at the largest ever and cut its 2015-16 season US export forecast by 50 million bushels. Soyabean prices also were capped by large stocks in the US and globally as South American producers Brazil and Argentina are harvesting another bumper crop.
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