U.S. grains: Wheat jumps as Egypt eyes U.S. supplies, funds cover shorts

Chicago | Reuters – U.S. wheat futures rose nearly 4 percent on Friday and bounced back from multi-month lows a day earlier, buoyed by short-covering and indications that U.S. wheat was becoming more competitive globally, analysts said.

Corn futures rose, rebounding from Thursday’s two-week low, and soybeans rallied from a one-month low.

Chicago Board of Trade December soft red winter wheat settled up 18 cents at $5.05-1/4 per bushel. CBOT December corn ended up 6-3/4 cents at $3.67-3/4 a bushel and November soybeans rose 3-1/4 cents to $8.45 a bushel.

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Wheat led the way up, supported by news that two cargoes of U.S. soft red winter wheat were offered at the cheapest price in an international Egyptian purchase tender, excluding freight costs.

The inclusion of freight offers made Russian wheat the cheapest on a landed basis.

Nonetheless, Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), ultimately bought 470,000 tonnes of wheat, including one 60,000-tonne cargo of U.S. wheat along with 350,000 tonnes of Russian wheat and 60,000 tonnes of Ukrainian origin.

Egypt’s GASC had not bought U.S. wheat at a tender since May 2017.

Traders were encouraged by U.S. wheat’s presence in the collection of offers as they awaited results of the tender, which were announced after the CBOT close.

“U.S. wheat is again competitive on the world market,” Arlan Suderman, INTL FCStone chief commodities economist, wrote in a note to clients.

Export demand for U.S. wheat has been sluggish but some analysts expect a pickup in demand in the coming months as supplies dwindle from top world supplier Russia.

Wheat futures also climbed on short-covering, a day after the CBOT December contract dipped to $4.85-1/2, its lowest level since January and the lowest for a most-active contract since mid-July.

CME Group data showed that open interest in CBOT wheat futures rose by more than 20,000 contracts as prices slumped on Thursday, an indication of traders establishing new short positions.

As well, the Australian Bureau of Agricultural and Resource Economics cut its 2018-19 wheat forecast to about 16.6 million tonnes, down from its September estimate of 19.1 million.

“There may be enough folks who have piled on shorts here … that people got a little carried away, and we’re bouncing back,” said Rich Feltes, vice president for research with R.J. O’Brien, adding, “That Australia number is supportive.”

Traders estimated that commodity funds were net buyers on Friday of 12,000 CBOT wheat contracts and 25,000 corn contracts.

CBOT corn rose nearly 2 percent, following strength in wheat and concerns about tightening global grain supplies.

CBOT soybeans followed the firm trend, drawing support as the U.S. Department of Agriculture confirmed private sales of 260,000 tonnes of U.S. soybeans to unknown destinations.

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