US wheat up 3pc on crop worries, weak dollar
Spring wheat futures on the Minneapolis Grain Exchange were driving the wheat market. MGEX wheat was buoyed by firming cash markets and talk of poor yields as the spring wheat harvest expands in the northern US Plains.
The spot MGEX September spring wheat contract was up 34-1/4 cents at $9.45 per bushel at midday, gaining against back months on spreads. The contract was up 3.76 percent, its biggest single-day rise since late June. Chicago Board of Trade spot wheat was up 3.2 percent.
"There is absolutely nothing for sale," said Charlie Sernatinger, analyst with ABN AMRO in Chicago, referring to the cash market for spring wheat.
Supplies of US quality high-protein wheat have been tight for months, and the 2011 harvest that traders hoped would replenish grain bins is a running few weeks later than normal after widespread planting delays.
The MGEX September contract "is outrunning everything else because harvest was pushed back, and some shorts are getting out of September," one Minneapolis cash trader said.
The MGEX wheat market is inverted, with the spot September contract trading at a premium of about 25 cents over the December -- a classic sign of tight supplies.
"The inversion tells you that spring wheat stocks have come down and the production isn't up to par," the cash source said.
At CBOT as of 12:10 p.m. CDT (1710 GMT), most-active December wheat was up 22-1/4 cents at $7.61-1/2 per bushel. December corn was up 13-1/4 cents at $7.26-1/4 and November soybeans were up 12-3/4 cents at $13.73-3/4.
CORN, SOY UP ON WEAK DOLLAR, US WEATHER
Corn and soybeans rose along with wheat as the dollar retreated and crude oil climbed. US equity markets were choppy but at least managed to avoid another collapse as fears of a US recession subsided.
"Today is a relief recovery. It's diminished European debt worry as we close and go into the weekend," said Dan Basse, president of AgResource Co in Chicago.
The US dollar index dipped about 0.5 percent, falling to a record low against the yen on speculation authorities will not halt the Japanese currency's surge.
A weaker dollar tends to buoy dollar-denominated grains and oilseeds by making them more competitive on the global market.
Short-covering and fundamental concerns about corn and soy yields ahead of critical rains expected in the Midwest crop belt this weekend added support.
Prospects for the US corn and soy crops are still uncertain. Storms were forecast this weekend that could bring much-needed moisture to the eastern Midwest, especially for soybeans, but some traders worried the rains could fall short.
"I'm very concerned about these rains that are supposed to come across Illinois over the weekend. If you've watched the last two rain systems, they have gotten to the Mississippi River and they have just died," said Roy Huckabay with the Linn Group, a Chicago brokerage.
Traders also awaited input from an annual four-day crop tour of the Midwest that starts next week. The Pro Farmer Midwest Crop Tour begins scouting fields on Monday.
Copyright Reuters, 2011