Wheat hits one-week high as US dryness concerns stoke gains

imageCHICAGO: US wheat futures rose 1.4 percent to a one-week high on Wednesday, extending four-day gains to around 4 percent, supported by short-covering and concern about dry weather in US growing regions.

Corn and soybeans also firmed, although renewed strength in the dollar capped rallies.

At the Chicago Board of Trade as of 11:23 a.m CDT (1623 GMT), May wheat was up 6 cents at $ 4.99-3/4 per bushel. May corn was up 3-1/2 cents at $ 3.91-1/2 a bushel and May soybeans were up 9-1/4 cents at $ 9.93-3/4 a bushel.

CBOT wheat has rebounded since falling to a five-month low last week. Commodity funds hold a sizable net short position, leaving the wheat market open to bouts of short-covering.

Also, the US winter crop is starting to emerge from dormancy amid dry conditions in parts of the Plains.

“It’s that time of year when the crop is at some risk, and you’ve got dryness in the Plains,” said Arlan Suderman, market analyst with Water Street Solutions. “But I don’t see any energy for sustaining a rally,” Suderman added.

Corn firmed a day after the US Department of Agriculture cut its forecasts of US and world corn inventories below trade expectations.

As well, US farmers are likely to reduce 2015 seedings of corn to 88.5 million acres, a five-year low, according to a growers’ survey released by Allendale Inc.

Still, CBOT May corn stayed inside the $ 3.75-to-$ 4 range in place since mid-January.

Soybeans rose after Brazilian state crop agency Conab on Tuesday cut its forecast for the 2014/15 soybean crop to 93.3 million tonnes from 94.6 million last month.

Additional support stemmed from uncertainty about the movement of freshly harvested South American crops to ports, given recent protests by truckers and producers.

Argentine farmers halted crop sales on Wednesday, a farming group said, kicking off a three-day strike that is unlikely to affect exports because of sufficient reserves in storage.

Meanwhile, Brazilian government representatives and independent truckers discussed freight rates in Brasilia on Tuesday, their first formal meeting since drivers ended two weeks of roadblocks to protest rising costs.

Copyright Reuters, 2015

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