Chicago Board of Trade wheat futures rallied to close higher on Wednesday as traders covered short positions following the market's drop to its lowest level in nearly six years. Soyabean futures also advanced on bargain buying, halting a six-session slide, while corn settled fractionally higher. At the CBOT, May wheat finished up 4-1/4 cents at $4.50-1/4 per bushel after dipping to $4.42-1/4, a contract low and the cheapest price for a most-active contract since June 2010.
May soyabeans ended up 3-1/2 cents at $8.61-1/2 a bushel while May corn settled up 1/2 cent at $3.56-1/4 a bushel. Wheat rallied on short-covering and bargain hunting after the CBOT reported hefty deliveries totalling 525 contracts against the spot March contract, which expires later this month. "The trade got a little eager to buy.... They felt like the delivery numbers were about as big as they are going to get, and it was time to cover some shorts," said Mike Zuzolo of Global Commodity Analytics.
Others cited concern about dry conditions emerging in the southern fringes of the US Plains. "Showers remain confined to north and east fringes of the hard red wheat (area) over the next two weeks, stressing growth in the south-west 1/4 of the belt," the Commodity Weather Group said in a daily note. Spot March spring wheat futures on the Minneapolis Grain Exchange surged to a one-month high in thin volume in what appeared to be a short squeeze ahead of the contract's March 14 expiration.
However, the rallies in wheat were dampened by ample global supplies and weeks of export-punishing strength in the US dollar. Soyabean futures drew support from CBOT soyameal as bearish data on US soyaoil reserves prompted traders to exit long soyaoil/short soyameal spread positions. The US Department of Agriculture on Tuesday reported US soyaoil stocks at the end of January at 2.11 billion lbs, more than some analysts expected.
"The crush numbers were not friendly to anything, but especially not to bean oil. So longs are unwinding their long oil/short meal spread," Zuzolo said. Corn futures eked out a higher close for the first time in seven trading sessions, although back months fell to contract lows. News was scarce, but some noted support from fears that South Africa's crop may fall short of forecasts. The South African government has estimated its maize crop at 7.2 million tonnes, but the country's largest grain producer group said it expected the figure would be revised down.
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