US soybean futures touched their highest levels in 2-1/2 months on Friday on short covering and hopes for improved export demand, while wheat retreated after reaching a five-week peak. Corn futures set a two-week high. The gains in soybeans and corn could prompt US farmers to sell more of the crops they put into storage following massive harvests last year.
Corn prices have tumbled over the past three years due to increasing global supplies, and many farmers have been waiting for prices to rise before selling their inventories. "We would use these short-covering rallies as selling opportunities," said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage in Iowa. May soybeans were up 0.4 percent at $8.92-3/4 a bushel at the Chicago Board of Trade at 11:10 am CST (1710 GMT). The most actively traded contract reached $8.95 earlier in the session, the highest price since December 22.
CBOT May corn rose 0.4 percent to $3.64-1/4 a bushel, with the most-active corn contract reaching its highest level since February 25. The markets were supported partly by the firmer Brazil real , which has advanced to a six-month high against the dollar. The stronger real could boost US farm exports because the United States competes with Brazil for corn and soybean business on the world market, traders said.
Yet Pfitzenmaier added that US trade advantages may be "going away soon, with Argentina becoming more aggressive price-wise for May on out and Brazil offering cheaper corn as they re-enter the market with new crop corn for July on out." CBOT May wheat dipped 0.3 percent to $4.75-1/2 a bushel. The most-active contract earlier traded to $4.78-1/2, its highest price since February 4.
"Any rally is struggling against price resistance from the size of US stocks, which provides a significant cushion against perceived lower new-crop production," said David Sheppard, managing director of UK merchant Gleadell. Concerns about abnormally dry weather in parts of the US southern Plains, where hard red winter wheat is grown, fuelled the recent rally in wheat. The US Department of Agriculture (USDA) forecasts US wheat stocks will be at a six-year high of 26.29 million tonnes at the end of the 2015-16 season.
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