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U.S. grains: Wheat extends rally on technical buying; corn firms

Chicago | Reuters — U.S. wheat futures rose on Friday, hitting their highest level in 5-1/2 weeks on technical buying after prices passed through key benchmarks, traders said.

Chicago Board of Trade soft red winter wheat rose on four of the last five trading sessions and the front-month contract notched a weekly gain of 3.5 per cent.

“Chicago futures are moving through resistance as managed funds cover short positions,” Sterling Smith, futures specialist at Citigroup, said in a note to clients.

Corn also firmed, supported by strong export demand and bargain buying after early weakness pushed prices near their weekly lows.

Soybean futures retreated, with weakness in the cash market leading prices lower after futures popped to a five-month high early in the trading session. Grain merchants noted a pickup in farmer sales of soybeans this week, which cut demand at processors and elevators. Some profit-taking in soymeal, which hit contract highs during overnight trading, added further pressure to the soy complex.

CBOT soft red winter wheat for March delivery settled up three cents at $5.98-1/2 a bushel (all figures US$). Prices topped out at $6.02-1/2, the highest for the front month since Jan. 8.

CBOT March wheat pushed through key resistance at its 50-day moving average during the overnight trading session, the first time it has been above that technical benchmark since Nov. 4.

“Wheat has all momentum up with a new high on the move,” Charlie Sernatinger, analyst at ED+F Man Capital, said in a note to clients.

Wheat was receiving additional support from concerns that dry soils in the southern U.S. Plains might hinder crop development there.

“It has been a tough winter in the U.S. and we are seeing parts of the Great Plains still plagued by dryness,” said Luke Mathews, a commodities strategist at the Commonwealth Bank of Australia.

CBOT March soybeans settled 6-3/4 cents lower at $13.37-1/2 a bushel, while March corn ended up 4-3/4 cents at $4.45-1/4 a bushel.

Corn prices, which rose 0.3 per cent this week in their fourth straight weekly gain, found support at their 100-day moving average.

The decline in soybeans, which posted a 0.5 per cent weekly gain, was limited by recent Chinese purchases of U.S. cargoes at a time when demand was expected to shift to South America.

“We were expecting global importers, including China, to switch their soybean purchases to South America, but it hasn’t occurred to the extent the market was anticipating,” said Luke Mathews, commodities strategist at the Commonwealth Bank of Australia.

— Mark Weinraub is a Reuters correspondent covering grain futures markets from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore.

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