Chicago Board of Trade rough rice futures roared to two-year highs on Wednesday on speculative buying and market talk of tighter US supplies, traders said.
"The funds that have been selling the market the past couple of days bought it back," said Jack Scoville, an analyst with the Price Futures Group in Chicago.
Contract highs were set in all months. September rice closed up 46 cents at $9.71 per hundredweight, the highest spot price since July 2004. Most-active November settled up 43-1/2 cents at $9.97-1/2 after reaching $10. Commercial hedge selling emerged at the highs, traders said.
"I've also heard the maybe some of the initial yields have been less than desired." The US rice harvest is just getting under way, with 5 percent cut as of Sunday, the USDA said. The harvest was 28 percent complete in Texas and 22 percent compete in Louisiana.
Last month, the USDA projected the average US rice yield at 6,908 lbs. per acre, up from 6,636 in 2005. The USDA put seedlings at 2.91 million acres, and production at 200 million hundredweight.
Volume was heavy, estimated by the CBOT at 2,253 rice futures and 96 options. Traders noted strong activity in daytime electronic trade, which was launched last week. Scoville said at least 1,300 contracts traded electronically.