US wheat rose over 1 percent on Wednesday posting its best advance in two weeks on reports that China bought large quantities of wheat from Australia and the United States. Wheat also traded higher on a bargain buying spree after a series of eight consecutive daily losses drove the market to a one-year low earlier in the week.
Soyabeans advanced for the eighth day in a row on tight stocks of soyabeans while the corn market turned choppy and mixed with crop friendly weather in the US restraining gains in both the corn and soya futures markets. Traders and analysts were skeptical that the wheat market would trace a steady line upward due to the plentiful global stockpile of wheat and escalating tensions and demonstrations in Egypt, the largest global wheat buyer.
"The sale of wheat to China is supportive but I'm concerned about what's going on in Egypt, the world's largest buyer. What's happening right now in Egypt isn't bullish," said Sterling Smith, market specialist for Citigroup. Market participants eyed the turmoil in Egypt which has erupted over President Mohamed Mursi's policies. Nevertheless, wheat futures prices held onto gains Wednesday following the news that China bought 300,000 tonnes of wheat from Australia and 360,000 tonnes from the United States.
Chicago Board of Trade July wheat was up 8-1/4 cents per bushel at $6.57-3/4, July corn was up 5-1/2 at $6.78-1/4 and July soyabeans were up 10-1/2 at $15.83-1/2. Spot US corn rose for a second session as bargain hunting and strong oil prices led to a rebound from the lowest level in two-and-half years for new-crop December earlier this week on expectations of record production.
The December contract continued to flounder on Wednesday and closed nearly flat. New-crop soyabeans rose on bargain hunting after four sessions of declines and old-crop soya stayed strong due to tight stocks of soya in the US In other markets, oil prices surged on a sharp decline in crude stockpiles in top consumer the United States and political unrest in Egypt, which could lead to supply disruptions.
"We have seen a bit of an improved tone come through pricing after bearishness over the past few days. It is just positioning by traders," said Luke Mathews, a commodities strategist at Commonwealth Bank of Australia. "We are still looking at a scenario of very large crops in 2013/14, and that is likely to replenish the tight old crop situation." US corn and soyabean crops have improved in the past week, aided by warmer weather, although heavy storms damaged crops in parts of the northern Midwest, the US Department of Agriculture and state reports said.
"Markets had gotten oversold. We've taken about a dollar out of beans since mid-June and around 75 cents out of corn, so I think there is a fair amount of short-covering before the holiday," Smith said. Markets closed early at 12:00 pm CDT (1700 GMT) on Wednesday rather than the normal 1:15 pm CDT (1815 GMT) closing time and will reopen at 8:30 am CDT (1330 GMT) on Friday due to the US Independence Day Holiday on July 4.
"There's a little nervousness about hotter weather coming up later in the month. Right now it looks ideal but of course that could change," Smith said. Crop friendly weather continues to dominate the US Midwest corn and soyabean growing region with moderate temperatures and occasional rainfall expected into at least mid-July, an agricultural meteorologist said on Wednesday.
"Rains will return to the north-western Corn Belt by the weekend and spread across the west through the middle of next week," said Joel Widenor, meteorologist for Commodity Weather Group. Widenor said the rains would ensure moisture supplies remain adequate and "plenty of moisture also will aid pollinating corn in the south." Crop forecaster Lanworth on Wednesday raised its outlook for the 2013/14 US corn and soyabean harvests due to an increased probability for normal to cool summer temperatures.