US grains futures extended gains, ending higher on Tuesday as part of a broad rally in commodities spurred by hopes that fresh measures from European policy makers might contain the region's debt crisis and shore up the global economy. Corn prices saw a late dip but recovered quickly to close just shy of 1 percent higher. Wheat and soyabean prices also ended the session higher, as the market extended Monday's gains and regained its footing after heavy losses last week.
Chicago Board of Trade benchmark December corn closed up 4-1/4 cents, or 0.7 percent, at $6.52-1/4, after rising to $6.66-1/4 earlier. CBOT wheat was up 10 cents, or 1.5 percent, at $6.58-1/4, after hitting $6.70. And CBOT nearby soyabean futures were up 3-1/4, or 0.3 percent, at $12.63 after climbing as high as $12.78-3/4 early.
The gains come after a series of losses had left the nearby CBOT wheat contract down more than 20 percent since hitting this year's top of $8.93-1/2 a bushel in February. As well, soyabeans had seen losses of more than 13 percent from a high of $14.56 in August. And corn was well off the peak of nearly $8 a bushel it hit in June. Grain markets were pummelled last week as Greece teetered on the edge of defaulting on its debt but on Tuesday, the grain markets joined oil, gold, copper and stock markets in posting gains.
A weaker dollar also helped bolster prices, adding to the competitiveness of US commodities on world markets. The US dollar index was down 1.2 percent. "There is still a lot of cautiousness about coming into commodities in a big way with the European situation still not resolved," said Rich Feltes, vice president of commodity research with RJ O'Brien. "But at least in the short term, we have fallen nearly $2 in beans and well over $1.50 in corn. It would appear we are set up technically for a bit of a rally,"
Chief fundamental support for wheat prices continued to come from the historic drought that has plagued the southern US Plains and key growing areas for the US hard red winter wheat crop. As well, dry conditions were impacting about 80 percent of the Ukraine's winter grain-sowing area.
Poor seeding conditions for US winter wheat, a slowed US corn harvest and bad weather in parts of China's corn-growing region added fundamental support to the grain markets. The market is awaiting fresh input from the US Department of Agriculture's September 30 quarterly stocks report. As well, USDA is expected to cut its estimate for overall 2011 US wheat production to the lowest level since 2006 when it issues its small grains report on Friday, analysts said.