U.S. corn futures rose 1.6 per cent on Tuesday, pushing through the key US$7-a-bushel level and notching their biggest gains in six weeks on bargain hunting and hopes that U.S. supplies will gain traction with overseas buyers, traders said.
"They are talking (about) getting a little bit more competitive on the export market," said Jason Britt, president of Central States Commodities. "That has been something we have not been able to talk about for quite some time."
Soybean prices declined, giving up early gains as prices failed to break through technical resistance at their 20-day moving average.
Chicago Board of Trade (CBOT) soft red wheat prices firmed, with bargain buyers pulling prices off the eight-month lows hit on Monday. Hard red winter wheat futures at the Kansas City Board of Trade also rose, but storms that provided key moisture relief to the crop in the U.S. Plains muted the gains.
The benchmark CBOT March corn contract settled up 11-1/2 cents at $7.05 a bushel (all figures US$). CBOT March broke through a key resistance level at its 10-day moving average for the first time since Feb. 5 during Tuesday's session.
The recent weakness in corn has spurred a round of short-covering from speculators taking some profits as the end of the month approached. Commodity Futures Trading Commission data released last week showed that speculators, including hedge funds, increased the short positions in their portfolios to the highest levels since June 2010.
Some technical buyers entered the market when the relative strength index for corn reached oversold territory over the past few days, said Arlan Suderman, senior market analyst for Water Street Solutions. During the last year, when the relative strength index declined to similar levels, prices rallied by 33 to 50 cents per bushel.
CBOT March soybeans were 3-1/2 cents lower at $14.47-3/4 a bushel.
Soybean prices have fallen for three days in a row as the harvest of crops in South America and the prospect of cheap exports from Brazil and Argentina hang over the market.
CBOT March wheat was up 6-1/2 cents at $7.05-3/4 a bushel.
Japan bought a cargo of U.S. milling wheat to feed livestock in an unusual deal that also supported prices on Tuesday. The 10 per cent drop in the benchmark CBOT contract during the past month made imports attractive.
At the Kansas City Board of Trade, hard red winter wheat for March delivery was just 1-1/4 cents higher at $7.32-3/4 a bushel.
Heavy snowfall covered nearly all of the U.S. Plains, with up to 20 inches falling in west-central Oklahoma and northwest Texas, said Don Keeney, meteorologist for MDA EarthSat Weather.
Keeney said from one inch to 1.5 inches of moisture could be added to dry soils in the Plains, but frozen soils might prevent the moisture from soaking into the ground.
The storms that have hit in the past week already have been beneficial to the dormant crops in the hard red winter wheat belt, although more moisture is needed to make up for the drought that has gripped the region since last summer.
In Kansas, the largest producer of hard red winter wheat, the crop was rated 23 per cent good to excellent as of Feb. 24, up from 20 percent a month ago, according to a report issued on Monday by the state field office of the U.S. Agriculture Department's National Agricultural Statistics Service (NASS).
-- Mark Weinraub is a Reuters correspondent covering the grain futures markets from Chicago. Additional reporting for Reuters by Sam Nelson.