Grains bounce

Grains rose on Wednesday, setting multi-week highs on short-covering and technical buying, as investors eyed stressful crop conditions in South America. Rain was expected to arrive on Wednesday night in dry areas of Argentina, the world's No 2 corn and No 3 soy exporter, pressured grains early, but worries persist about drought damage to yields, said Jason Roose, analyst at US Commodities in West Des Moines, Iowa.
"Even though we started lower on anticipated rains, the coverage seems to be less than expected," he said. "We're watching the weather very close in Brazil and southern Argentina." Orders to buy corn and soyabeans at lower prices earlier in the day put a floor underneath prices, and slight weakness in the dollar also underpinned, traders said.
Soyabeans have settled higher five straight sessions, their longest run-up in more than two months. Corn and wheat have registered four consecutive gains, and some saw the drop in early trading as an attractive time to buy, said Arlan Suderman, market analyst at Farm Futures magazine.
Grains were already moving higher in overnight trading hours before renewed concerns about the European economy dampened investor sentiment and lowered prices, before the recovery later, Suderman said. "It's still a 'buy the break' market," he said. "(Traders thought) 'we broke, we're going to buy it.'" Chicago Board of Trade March corn gained 9-1/2 cents, or 1.6 percent, to $6.16-1/2 a bushel, hitting a nearly five-week high.
Rain on Wednesday night looks to favour the north-eastern half of Argentina's crop belt, said Joel Widenor, meteorologist with the Commodity Weather Group. "It will certainly catch some of the dry spots," he said. "It will narrow the concern area down, in terms of moisture stress, to about one-third of the crop belt (from one-half)."
Brazil will not see much rain until the end of the week, with central and northern areas getting most of the rain next week, he said. Farmers in Brazil's largest soy producing state, Mato Grosso, are days away from beginning the harvest of record corn and soy crops. Chicago January soyabeans gained 9-1/4 cents, or 0.8 percent, to $11.53-3/4 a bushel, touching a fresh four-week top. March wheat gained 9-1/4 cents, or 1.5 percent, at $6.17 a bushel on short-covering, touching a more than two-week high even though beneficial moisture improved prospects for the US southern Plains winter wheat crop.