US corn futures rose 1.7 percent on Tuesday as traders unwound bearish bets on the market ahead of a key government supply report, traders said. Soyabean futures also rose in pre-report positioning, while wheat futures were mixed. Improving crop conditions and profit-taking weighed on the benchmark Chicago Board of Trade soft red winter wheat contracts, but Kansas City Board of Trade hard red winter wheat edged higher on concerns about a cold snap damaging the developing crop in the US Plains.
Corn's gains were their biggest in a month. The market received additional support from planting delays in the US Midwest as well as talk of burgeoning demand from China. "It is just technical rebound after hitting a multi-month low on Friday," said Terry Reilly, senior commodity analyst at Futures International. "You are seeing a little bit of short-covering from the new shorts that entered the market after the grain stocks report." Both corn and soyabeans saw front-month contracts gain more than deferred offerings due to firm cash markets.
"The weather, the planting delay potential and the stronger cash basis brought in the short-covering," said Mike Zuzolo, president of Global Commodity Analytics, a farm advisory service in Lafayette, Indiana. Investors had their biggest short positions in the front-month contracts, Zuzolo said. Chicago Board of Trade May corn futures settled up 10-3/4 cents at $6.44-1/4 a bushel, their second straight day of gains.
Improving ethanol margins also helped boost corn futures, said Austin Damiani, a broker for Frontier Futures. CBOT May soyabeans were up 17-1/2 cents at $13.95-1/2 a bushel, while CBOT May wheat shed 3-3/4 cents to $7.08-3/4 a bushel. The wheat contract had risen 7.3 percent in the past week before Tuesday's drop. US winter wheat condition ratings improved in the latest week but hovered at the lowest level for this time of year since 2002, the US Department of Agriculture's weekly crop progress report showed. The USDA said 36 percent of the US winter wheat crop was rated in good to excellent condition, up from 34 percent a week earlier. "Wheat prices were being supported by harsh US winter, which was hurting the wheat crop," said Joyce Liu, an analyst at Phillip Futures. "With the improvement in wheat crop condition, I think some of those fears have eased."