Markets

Wheat up 1.3 percent, soy rebounds on EU optimism

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Corn and soybeans were also underpinned by US farmers holding back stocks of freshly harvested crops in the hope of higher prices after a recent selloff.

"The dollar is under pressure and overall commodities are a bit firmer, it seems to be macro driven," said Brett Cooper, a senior manager of markets at FCStone Australia.

"Internal basis levels are holding up well in the US on lack of farmer selling"

Chicago Board of Trade December corn rose 0.9 percent to $6.54-3/4 a bushel by 0330 GMT and December wheat gained 1.3 percent to $6.40 a bushel. November soy was up 1.1 percent to $12.25-1/4 a bushel.

Asian stocks rose and the euro gave back some of the gains it made last week after euro zone leaders made some progress towards a strategy to tackle the region's debt crisis.

At a summit on Sunday, European Union leaders neared agreement on bank recapitalisation and on how to use the European Financial Stability Facility to stave off bond market contagion.

The agricultural market fundamentals were also supportive for prices on Monday. Farmers are reluctant sellers of their freshly cut corn and soybeans because prices are well off recent peaks and they have sufficient cash flow to meet expenses for now.

Soybeans shed 4.6 percent last week and have dropped in six out of the past seven weeks. Wheat and corn closed up 1.4 percent last week.

Corn and soybean spot basis bids were steady to firm around the US Midwest on Friday as slow farmer sales underpinned the basis.

US farmers have been harvesting corn and soy at a breakneck pace. Early last week the US Department of Agriculture said the corn harvest was 47 percent complete and soy was 69 percent complete.

Traders expect the USDA to show corn harvest 65 to 75 percent complete and soybean harvest 80 to 85 percent done when it issues a weekly report on Monday.

Corn is expected to find additional support this week on continued talk that exports in the 2011/12 season (Sept/Aug) would be higher than the 1.6 billion bushels forecast by the USDA this month.

China, the world's second-largest consumer of corn, alone bought 900,000 tonnes of US corn in the week ended October 13

The USDA has projected US corn exports to China in 2011/12 at 2 million tonnes, but private estimates have the country buying five times as much through next year.

Large speculators bolstered their net long position in CBOT soybean futures and options for the first time in seven weeks, according to regulatory data released on Friday.

 

Copyright Reuters, 2011