Grains rose to fresh multi-week highs Tuesday as encouraging economic signs from Europe improved investor sentiment and dry conditions threatened South American corn and soy yields. Grains took support from a weaker US dollar, which helps US commodities trade more competitively in the export market, and sharply higher crude oil and equities.
"I think the South American weather play was yesterday - this had more of a macro feel to me," said Roy Huckabay, analyst at The Linn Group in Chicago. Corn and soyabeans touched highs of three and four weeks respectively in volatile trading that fell flat around midday before recovering.
"I think it's a consolidation," said Arlan Suderman, market analyst at Farm Futures magazine, of some investors pulling back. "When you look at what we've done, we've gained in the soyabeans, corn has had a significant move. "It's (a sentiment of) 'We're supported, we've come a long ways, now let's be more cautious.'" Nearby March corn has added 4 percent so far this week, while front-month soyabeans have gained nearly 5 percent since Wednesday's low.
Chicago Board of Trade January soyabeans rose 7-1/2 cents, or 0.7 percent, to $11.44-1/2 a bushel, settling higher for the fourth straight session. March corn gained 6 cents, or 1 percent, to $6.07 a bushel, rising for a third consecutive session. March wheat added 8 cents, or 1.3 percent, to $6.07-3/4 a bushel, touching a two-week top with short-covering support. Wheat rose for the third straight session.
Trading volumes continued to thin out ahead of the holidays. Corn and wheat trading was less than half of their 30-day averages, while soyabean volume dropped off by about 23 percent from its 30-day average, according to Reuters preliminary data. Investor fears about the debt-riddled eurozone eased for now, lifting major stock indexes and crude oil about 3 percent.
A survey from the Munich-based Ifo think-tank found German business morale rose sharply in December, while Spain's financing costs fell sharply at an auction of treasury bills, restoring some investor confidence in the global economic picture. Much-needed rains are expected through Thursday for soyabean and corn fields in Argentina and southern Brazil, offering short-term relief from dry conditions as stressful weather returns next week, US meteorologist Drew Lerner of World Weather Inc said Tuesday. Farmers in Argentina, the world's No 2 corn and No 3 soy exporter, are still planting soyabeans, but the corn crop is more developed.
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