US grain futures rose more than 1 percent on Tuesday, with corn notching a near three-week high and wheat up for the fourth straight day, buoyed by a weak dollar ahead of a closely-watched government crop report. An announcement late in the session that Italian Prime Minister Silvio Berlusconi would resign if a debt deal was approved in parliament spurred an equities rally and pushed commodity prices to their highs for the day.
Strong cash grains markets also supported futures as farmers delayed sales of corn, soybeans and wheat to processors, elevators and ethanol plants. Trading volume was heavy at the Chicago Board of Trade as investors squared positions ahead of Wednesday's US Agriculture Department's monthly supply and demand report, in which analysts widely expect the government to cut yields for corn and soybeans.
"Evening up (positions) can be liquidation by the longs or short-covering by the shorts. The announcement by Berlusconi tipped the scales to the shorts," said Dan Manternach, analyst at Doane Advisory Services in St. Louis. CBOT December wheat surged 2.8 percent, or 18-1/4 cents, to $6.57 per bushel, near the highest price in about a month, while CBOT December corn settled 7-1/4 cents higher at $6.60-1/2.
Trading volume in wheat was highest since August and corn volume the highest since July, according to Reuters data. Actively-traded CBOT January soybeans rose 3-1/4 cents to $12.05 per bushel after posting their biggest daily loss in three weeks on Monday. "It's just a correction, a technical bounce. They're short-covering ahead of the report. There's not much else," said Citigroup analyst Mario Balletto. US farmers are nearly done with the corn and soybean harvest but some processors and ethanol plants are bidding aggressively for supplies as the growers hold out for higher prices.
Wheat cash markets also underpinned futures, with basis bids - the amount above or below benchmark futures prices that grain merchants bid to buy grain - rising or holding steady for spring and winter wheat varieties. "The main thing is that cash markets continue to be strong. They're going pretty good on corn in Indiana and Ohio and the markets are hanging in there, if not improving a little bit," said Tim Emslie, analyst at Country Hedging.
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