US wheat futures rose to their highest in nearly six weeks on Thursday on a round of short-covering after weakening overnight, traders said. Corn also firmed, with strength in wheat lending support to the yellow grain while soyabeans eased on a round of profit taking.
Wheat was on track for its fourth day of gains in five sessions, a rally that has been fuelled by speculative buying despite a glut of supplies both globally and domestically. "Wheat is just incredibly cheap compared to the other ag markets," said Terry Reilly, grains analyst with Futures International in Chicago. "With the New Year and with bulls looking for higher inflation in 2017, it is one of the more attractive commodities."
Wheat also found technical support after the benchmark Chicago Board of Trade March soft red winter wheat contract retreated to its 50-day moving average during the overnight trading session. At 10:20 am CST (1620 GMT), CBOT March soft red winter wheat was up 6 cents at $4.24-1/2 a bushel. The most-active wheat contract peaked at $4.24-3/4 a bushel, its highest since November 25. Wheat futures also benefited from positioning by traders adjusting their bets on the grain ahead of a rebalancing by index funds.
In an update on index reweighting, Societe Generale reiterated that it expected Kansas hard red winter wheat to see the biggest positive impact in trading volumes during the rebalancing period along with lean hogs and live cattle. It also sees a significant positive volume effect on Chicago wheat and corn, with a smaller positive impact on soyabeans.
CBOT March soyabeans were down 3-1/2 cents at $10.02-3/4 a bushel. The soyabean market is weighing up forecasts for bumper harvests in South America against potential weather setbacks, including heavy rain that has disrupted late planting in Argentina. CBOT corn for March delivery was up 1-1/2 cents at $3.61-1/4 a bushel, also recovering from early weakness. The most-active corn contract, which has risen for four days in a row, hit a three-week high. A falling dollar, which makes US commodities more attractive to investors looking for a hedge against inflation, also helped corn and wheat. Wheat is typically the agricultural commodity most affected by dollar fluctuations.
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