WINNIPEG/CHICAGO: Wheat reached a fresh five-week high on Friday, while soybeans and corn posted modest gains, as the grains looked to extend winning streaks that have lasted more than a week.
Corn, soybeans and wheat have hit multi-week highs this week and are set to notch big weekly gains, even as volumes thinned ahead of a holiday weekend.
Traders remained focused on concerns about below-normal rainfall in Brazil and Argentina that could curb corn and soybean yields, but some took profits and pared the weather premium on those crops, said Shawn McCambridge, analyst at Jefferies Bache in Chicago.
"The South American weather situation is uncertain - it could go either way," he said. "So (the market) is squeezing out some of the nervous longs going into the long weekend. Wheat doesn't have that influence."
A cold front will bring badly needed rain to Brazil's southernmost state and important soy producer Rio Grande do Sul, but volumes will be low and a longer-range forecast showed the region was in for more dry weather, forecaster Somar said.
Argentina's 2011/12 soy crop could suffer if it does not rain soon in key growing areas, the Buenos Aires Grains Exchange said on Thursday.
"Some people are saying there's going to be more hot and dry weather next week and some are saying there are going to be some good rains this weekend," said Brian Basting, commodity research analyst at Advance Trading in Bloomington, Illinois. "Otherwise I don't see a lot of news."
Outside markets were little changed, with crude oil, North American stocks and the dollar up slightly.
Chicago Board of Trade wheat for March delivery gained 5 cents or 0.8 percent to $6.26-3/4 a bushel by 11:33 a.m. CST (1733 GMT) and touched the nearby contract's highest price since Nov. 16. March corn gained 2-1/4 cents or 0.4 percent at $6.19-3/4 a bushel.
Corn and wheat have settled higher in five straight sessions.
January soybeans rose 3-3/4 cents or 0.3 percent to $11.66 a bushel, looking to stretch their winning streak to seven sessions for the first time in nearly a year.
January soybeans are on track for a second straight week of gains, while March corn has added about 6 percent so far this week, its biggest weekly rise since mid-October. March wheat has jumped 7 percent.
The strong week, albeit in thin trading volume, has pared the crops' overall losses for 2011. Wheat and soybeans are on course for yearly declines of 21 and 16 percent, while corn prices are down only 1.5 percent year-over-year amid tight supplies compared to demand.
Parts of Brazil's No. 3 soy state could see 24 millimeters (0.95 inch) of rain from Friday to Saturday, forecaster Somar said, raising the chances of the crop there germinating successfully and sprouting shoots.
No. 1 Brazilian soy state Mato Grosso, which has been drier than the five-year average so far this month, should see heavy showers on Friday and Saturday. The state is expected to begin harvesting within days.
Commerzbank on Friday said it expects grain prices to track higher in 2012. It forecast average prices of $6.90 per bushel for corn, $6.70 for Chicago wheat and $12.50 per bushel for soybeans.
Basting of Advance Trading said he was less bullish.
US soybean exports could see strong competition from South American shipments, depending on how those crops turn out, he said, while wheat from the Black Sea region has undercut US wheat exports.
Corn faces competition from feed wheat in the livestock sector and a return to more normal, higher yields could swell supplies, Basting said.
"I'm taking a more cautious stance."
Copyright Reuters, 2011
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