US wheat futures steady near five-month highs

US wheat futures were steady in thin trade on Tuesday after hitting the highest level since August 6 on Monday on growing concerns about global shortages of milling wheat as flooding in Australia pointed to quality downgrades.
Australia, likely to be the world's third-biggest wheat exporters, could see up to 40 percent of an expected 22.6 million tonnes crop downgraded to below milling wheat, compared with a normal five to 10 percent. Chicago Board of Trade wheat for December delivery posted a 0.16 percent gain to $8.06-1/4 per bushel, approaching the spot contract's highest price since August 6 of $8.25, when severe drought in the Black Sea region prompted Russia to halt exports.
Corn for December delivery, was little changed, easing 0.04 percent to $6.20-1/4 per bushel on forecasts for cooler, wetter weather in Argentina, where crops had been stressed by hot, dry weather.
Soybeans for January delivery, the most actively traded contract, rose 0.07 percent to $13.80 per bushel on a lack of producer selling as rain refreshed crops in South American. Devastating floods in the north-eastern tropical Australian state of Queensland have affected coastal cotton and sugarcane stocks although it is too early to quantify losses with flooding in some areas expected to worsen over the next 24 to 48 hours, according the Commonwealth Bank of Australia. Some wheat crops have also been affected. Australia is a leading exporter of wheat, cotton and sugar.
US high-protein wheat futures in Kansas City and Minneapolis climbed to more than two-year highs on Monday as flooding downgraded Australia's wheat crop and slowed the transport of newly harvested supplies, reinforcing concerns of a global shortage of milling wheat.
In the United States, snow melt has uncovered the winter wheat crop, making it vulnerable to a cold front expected this week. US corn and soy futures each set new two-year tops early on Monday before retreating on forecasts for cooler, wetter weather in Argentina, where crops had been stressed by hot, dry weather.
Traders are now eyeing likely index fund freelancing, in which the funds could sell portions of their holdings as early as Wednesday, while other traders were already squaring positions ahead of the January 12 U. s. Agriculture Department's (USDA) monthly supply and demand report.
Large speculators reversed their net short position in Chicago Board of Trade wheat futures and options, taking a long position for the first time since the week ended September 14, 2010, according to Commodity Futures Trading Commission data issued on Monday.
US stocks greeted the new year with a rally on Monday as encouraging signs about the outlook for manufacturing around the world prompted investors to inject new money into the market. The Dow Jones industrial average gained 93.24 points, or 0.81 percent, to 11,670.75.
The dollar edged higher against the euro on Monday, aided by a jump in global stock markets and rising Treasury yields. Thin trading due to holidays in Tokyo and London added to volatility in the euro, but the dollar was expected to outperform the single currency as concerns about some euro zone nations' ability to sell debt top investor worries.
Oil prices rose to a 27-month peak on Monday as upbeat European and U. s. manufacturing data and forecasts for cold weather reinforced optimism about economic and energy demand growth. U. s. crude oil for February delivery rose 17 cents to settle at $91.55 a barrel, its highest settlement since early October 2008, after earlier rising as high as $92.58.