2024-01-24 22:08:46
Corn futures on the Chicago Board of Trade rose 1.3% on Wednesday as uncertainty over the South American crop outlook and a weaker dollar triggered a round of short covering, which helped the benchmark corn contract break out of three-year lows recorded last week, traders said.
CBOT wheat futures finished 2.4% higher on technical buying and dollar weakness, while soybean contracts finished mixed after a choppy session.
CBOT March corn gained 5-3/4 cents to $4.52-1/2 a bushel, extending its rebound after falling last week to $4.36-3/4, the lowest level on a continuous graph of the most active contract since December 2020.
CBOT March wheat finished up 14-1/4 cents at $6.10-3/4 per bushel. March soybeans settled up 3/4 of a cent at $12.40-1/4 a bushel, limiting gains after hitting $12.46, its highest level since Jan. 12.
Energy markets were supportive, with crude oil rising about 1% on a larger-than-expected drawdown of U.S. crude inventories. Corn and soybeans sometimes follow crude oil trends due to their use in biofuels.
Commodity funds hold large net short positions in CBOT corn, wheat and soybean futures, making these three markets ripe for short covering rallies. Last week, corn hit a three-year low and soybeans hit a two-year low.
Meanwhile, intense heat is forecast in growing areas of Argentina, which was expecting a bumper harvest, and market participants continue to debate the size of Brazil’s developing corn and soybean crops .
“The size of Brazil’s crop is unknown, and Argentina is going to experience its first heat and dry spell of the season,” said Tom Fritz, a partner at EFG Group in Chicago. Add to that all the short positions in the market and it’s like, “OK, let’s take the money.”
Forecasters expect production of Brazil’s second corn crop to decline, due to reduced seeded area.
As for wheat, Russian agricultural consultancy Sovecon raised its 2024 wheat harvest forecast to 92.2 million tonnes, up from 91.3 million in December, and is now not far from 92, 8 million tonnes harvested in 2023. (Reporting by Julie Ingwersen in Chicago; additional reporting by Naveen Thukral in Singapore and Sybille de La Hamaide in Paris; writing by David Evans and Marguerita Choy)
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