Monday November 24, 2014

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U.S. soy closes firm on technicals

Wheat rallies on exports, rises through 30-day moving average

U.S. soybean futures rose on Monday, snapping a streak of three straight negative sessions, on technical buying and worries that delays in the South American harvest will further slow delivery of supplies from Argentina and Brazil, traders said.

The soybean market found support from bargain-hunters after prices on Friday dropped to their lowest level since June.

Wheat futures rose due to strong global demand for U.S. supplies as well as concerns about potential damage to the developing crop in the U.S. Plains from forecasts for a turn to colder weather.

Corn futures edged higher as wet weather in key growing areas across the U.S. Midwest threatened to delay the start of planting this week in places such as Illinois and Iowa.

All three commodities benefited from short covering as prices have fallen sharply during the past two weeks.

"More than anything, it was just short-covering," said Karl Setzer, market analyst for MaxYield Cooperative. "We really kind of pounded the grains last week. We have ever since we came out with the (quarterly) stocks report."

Chicago Board of Trade May soft red winter wheat futures ended 13-1/2 cents higher at $7.12-1/2 a bushel (all figures US$). Prices rose through resistance at the 30-day moving average early in Monday's session, the first time prices surpassed that benchmark since the U.S. Agriculture Department's bearish quarterly stocks report on March 28.

Hard red winter wheat futures at the Kansas City Board of Trade and MGEX spring wheat also posted strong gains.

China bought 14 to 16 cargoes of U.S. wheat on Thursday for delivery from June to December, the China National Grain and Oils Information Centre, an official think tank, said on Monday. The announcement confirmed rumours that supported wheat prices last week.

"China's wheat purchase and ongoing U.S./global crop concerns have the wheat complex supported across the board," Matt Zeller, director of research at INTL FCStone, said in a research note to clients.

"The crop is looking pretty poor in some parts of the U.S. as it has been dry and we are worried about the emergence," said one Melbourne-based analyst.

A cold spell may also have damaged some U.S. wheat already left vulnerable by dryness, and could lead farmers to write off some fields, crop experts said on Friday. USDA will release its latest update of winter wheat conditions on Monday afternoon.

CBOT May soybeans were 16-1/4 cents higher at $13.78 a bushel. Traders noted some technical buyers entered the market when prices fell near the low end of their 20-day Bollinger range of $13.54-1/4 a bushel during the overnight session.

CBOT May corn was 4-1/2 cents higher at $6.33-1/2 a bushel, lagging the gains in soybeans and wheat due to the unexpected abundance of supplies reported by USDA in the quarterly stocks report.

Traders were adjusting to new, shorter trading hours at the CBOT on Monday. The exchange cut back its session to 17.5 hours from 21 after a move to expand the trading day in May 2012 hurt liquidity.

Trading paused for 45 minutes at 7:45 a.m. CT before activity resumed in both the trading pits and on the electronic screens. The session ended at 1:15 p.m.

The grains trade is now building up to Wednesday's monthly supply-and-demand estimates from the USDA, with attention focused on how ending stocks projections will reflect the bigger-than-anticipated quarterly stocks numbers issued at the end of March.

-- Mark Weinraub covers the grain futures markets from Chicago for Reuters. Additional reporting for Reuters by Naveen Thukral in Singapore.


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