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U.S. grains: Soy rallies on short-covering, China rate cut

(Lisa Guenther photo)

Chicago | Reuters — U.S. soybeans rallied 1.8 per cent on Friday, pushing prices into positive territory for the week as investors covered short positions and top soy importer China unexpectedly cut interest rates.

Corn futures edged lower and wheat mostly higher at the Chicago Board of Trade in a choppy and volatile session amid steep gains in the dollar that could curb export demand for U.S. supplies.

“The short-term bullishness is a knee-jerk reaction,” Global Commodities Analytics analyst Mike Zuzolo said of soybeans.

China, which buys roughly 60 per cent of global soybean exports, cut rates for the first time in two years in an effort to spur growth in the world’s second-largest economy.

Increased growth could spark more imports but a rising dollar could make U.S. supplies less competitive with other shippers in Brazil and Argentina. Cheaper corn and wheat offered out of the Black Sea has limited U.S. export prospects, pressuring futures.

CBOT January soybean futures finished 18-1/2 cents higher at $10.39 per bushel, rising about 1.7 per cent for the week (all figures US$).

Corn for December delivery fell 1/2 cent to $3.72-3/4, erasing the day’s gains in a flurry of trading in the final minute of the session as options on the contract expired.

CBOT December wheat was flat at $5.47-1/4. Both wheat and corn lost more than two per cent for the week.

Ethanol futures were up five per cent, extending gains after the U.S. Environmental Protection Agency said it will not finalize biofuel targets for 2014 until next year.

Jefferies Bache analyst Shawn McCambridge said the EPA announcement had little effect on the corn market. “We are on a projected path to produce just shy of 14 billion gallons (of ethanol), with what we’ve produced already and expectations of a decent production through the end of the year,” he said.

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

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