U.S. wheat futures rose for a fourth day on Thursday, as investors covered short positions after the U.S. Department of Agriculture lowered its forecasts of U.S. and global wheat stockpiles below trade expectations.
Corn and soybean futures followed wheat higher, with benchmark November soybeans also posting a fourth straight gain.
At the Chicago Board of Trade (CBOT), wheat for September delivery settled up four cents at $6.83 per bushel, paring gains toward the close after reaching a two-week high of $6.93 (all figures US$).
New-crop December corn ended up 5-1/2 cents at $5.27/bu., and new-crop November soybeans were up six cents at $12.90-3/4 a bushel.
Wheat advanced after the USDA released monthly data during the trading session. In its July supply/demand report, the government lowered its forecast of 2013-14 U.S. wheat ending stocks to 576 million bushels from its forecast of 659 million in June and below the average analyst estimate of 632 million.
The government cited expectations for increased export demand, especially from China.
“The new-crop wheat carry-out number should be seen as pretty bullish,” said Joe Vaclavik, president of Standard Grain in Chicago. “At 576 (million bushels), I don’t think anybody was looking for a number that low. Exports are up, so there is your culprit.”
USDA also slashed its forecast of global wheat ending stocks for 2013-14 to 172.38 million tonnes, from 181.25 million in June. If realized, the figure would be the smallest since 2008-09.
China, the world’s top wheat grower, is expected to import the highest volume of the grain in a decade in 2013-14 after its domestic harvest was damaged by bad weather, according to a forecast by China National Grain and Oils Information Centre, an official think tank.
China bought more than 1.3 million tonnes of U.S. wheat in early July in a flurry of deals after U.S. prices fell to near the lowest levels in a year.
Wheat and other grains also drew support from a sharp drop in the dollar, after comments from U.S. Federal Reserve chairman Ben Bernanke indicated the U.S. central bank may not wind down its economic stimulus program as soon as previously expected.
The U.S. dollar index was on track for a two-day decline of more than 2.2 per cent, its biggest since 2009. A weaker dollar makes dollar-denominated commodities like grains cheaper to overseas buyers.
As well, funds hold a net short position in CBOT wheat and corn, leaving those markets vulnerable to bouts of short-covering.
Corn, soybeans follow wheat higher
Corn followed wheat higher on tightening world stocks. USDA lowered its forecast of global corn ending stocks for 2013-14 to 150.97 million tonnes, from 151.83 million in June, while the average analyst estimate was for 152.4 million.
USDA also pared its forecast of China’s 2013-14 corn harvest to 211 million tonnes, from 212 million previously.
“I think the wheat demand showing up in China and the Chinese corn crop reduction of one million tonnes has the trade thinking that maybe the demand low in feedgrains is in,” said Mike Zuzolo, president of Global Commodity Analytics in Lafayette, Indiana.
Also supportive, USDA in a weekly report showed export sales of U.S. corn at 1.05 million tonnes, topping trade expectations for 350,000 to 600,000 tonnes.
Soybeans rallied after dipping lower in response to USDA raising its forecast of U.S. 2013-14 soybean production and ending stocks.
The soy market rose on spillover strength from corn and wheat, as well as concerns about U.S. soybean crop development stemming from planting delays that have persisted from springtime into the summer.
USDA has projected 2013 soybean plantings at 77.7 million acres, but traders say planting delays due to excessive rain in parts of the Midwest may prompt the government to lower that figure later this year.
“From an agronomy standpoint, there is concern about what if we have an early fall, or what if the plant shuts down,” one Chicago analyst said. “Nobody wants to sell (soybeans) until we see the weather over the next 30 days.”
— Julie Ingwersen is a Reuters correspondent reporting on ag commodity markets from Chicago. Additional reporting for Reuters by Gus Trompiz in Paris and Naveen Thukral in Singapore.