US wheat plugs into revival amid positive market outlook

 

 

Investors across the piste managed to retain their optimism in early deals on Thursday (May 27), providing support to farm commodities, even wheat.

 

Wheat, which followed share markets in the last session in softening towards the close, may be cementing its tie-up with external markets.

 

With shares higher - Tokyo's Nikkei index ended up 1.2%, with Shanghai stocks gaining the same as of 06:50 GMT (07:50 UK time) – oil adding 1.0% and London copper making ground, there was plenty on this score for wheat bulls to feed on.

 

The dollar was lower too, by 0.7% against a basket of currencies, helping the likes of oil, copper and indeed wheat, in that a weaker greenback makes assets denominated in it more competitive to buyers in other currencies.

 

Thursday's positive start was attributed to eurozone stability, however temporary it may prove, which encouraged short-covering in the euro ahead of what is, in many countries, a long weekend.

 

Indeed, it is tempting to read a bit of that in Chicago wheat's rise of 2.5 cents to US$4.64 ½ a bushel too, for July delivery, given that US markets will be closed on Monday for Memorial Day, funds are majorly short in the grain, and the potential for weather surprises is warming up.

 

Meanwhile, analysts expects the Northern Plains to remain wet for the next couple of weeks, slowing down the last stage of planting and early development – especially in Canada, adding that major wheat growing areas in Northern China may also be headed for drought.

 

Also, speculation over a potential La Nina is still finding an echo in Chicago, with latest comparisons with 1983, when conditions turned hot and dry in many states in the middle of July, and stayed that way, damaging yields.

 

However, concerns over immediate dryness for corn and soybean country appear to be waning, with latest forecasts reverted back to previous models which show the high pressure ridge lasting about week before showers return early next week, analysts said.

 

Meanwhile, soy were relatively slow, adding 4.25 cents to US$9.42 ¼ a bushel for July delivery and reversing some recent strength in later contracts, with November up a mere 2 cents at US$9.12 a bushel.

 

Corn barely moved, adding 0.25 cents to US$3.71 ¾ a bushel for July. But there has been no more yet on the Chinese import rumours, which help raise the grain in the last session.