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U.S. grains: Soy, corn higher but trim gains after short-covering surge

Chicago | Reuters — U.S. soybean and corn futures surged to multi-month highs during a short-covering rally on Tuesday but trimmed their gains after the elevated prices sparked a round of selling by farmers.

Soymeal futures that had jumped the most in four years on Monday, helping to fuel the rise in soybeans and corn, finished lower in a volatile and high-volume session at the Chicago Board of Trade. Technical resistance, with several agriculture futures contracts nearing their 100-day moving averages, also limited gains.

CBOT December soymeal futures also hit resistance near their psychological threshold of $400 per ton (all figures US$). Prices reached a six-week high $399.80 before finishing $1.70 lower at $375.10. Soybeans for November delivery ended two cents higher at $10.08 per bushel after rising to $10.34-1/2, the highest since Sept. 2.

CBOT December corn touched a nine-week high of $3.71-3/4 per bushel before settling 1-1/2 cents higher at $3.64-1/2.

“In general, the beans are up because of the meal, and the meal is up because the crushers have oversold their production,” ED+F Man Capital analyst Charlie Sernatinger said of U.S. soybean processors.

Farmers were harvesting record-large soy and corn crops under largely warm and dry weather in the central U.S. but, until this week, preferred to store the fresh supplies as prices hovered near the lowest levels in four years or more.

The slow pace of farmer sales left domestic processors and exporters short of supplies needed to meet commitments, forcing them to cover their short futures positions.

“There is evidently still a bottleneck of available supply at present, which should be dissolved soon, though, making us expect a significant fall in prices especially for soybeans,” Commerzbank analysts said in a note.

CBOT December wheat gained 1.5 per cent, or eight cents, to $5.30-3/4 a bushel, underpinned by crop concerns around the world.

The U.S. Department of Agriculture estimated the condition of winter wheat at 59 per cent good-to-excellent, well below analysts’ expectations of 68 per cent.

A lack of rain, and early cold, have left crops vulnerable in Russia and Ukraine, while in Australia adverse weather is expected to put the wheat harvest below the official forecast.

— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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