(Reuters) – U.S. grain futures edged higher on Wednesday on technical buying, while profit-taking pushed soybean meal futures down sharply after a rally in the previous session.
Corn, soybeans and wheat extended sharp gains from Tuesday that were driven by short-covering, strong demand and concerns about cold weather damaging the U.S. wheat crop. Soymeal was the outlier, retreating after the March contract touched a life-of-contract high overnight.
U.S. soymeal has been in demand as output has slowed from Argentina, the world’s top supplier of the livestock feed. Farmers in Argentina have been hoarding their soybeans, which are priced in U.S. dollars, as a hedge against inflation.
The market has felt additional support recently from dryness in parts of Brazil and frigid temperatures in the U.S. Midwest slowing the movement of soy products in some areas.
Soymeal will probably resume its rally as export demand remains brisk, and cold weather has slowed the crushing of soybeans into the livestock feed, said Rich Feltes, vice president of research for RJ O’Brien.
Chicago Board of Trade March soymeal dropped $5 to $442 per ton after reaching a high of $448.80 overnight. March soybeans rose 3 cents to $13.16-1/4 a bushel after hitting $13.20 in overnight trading, the highest level since Jan. 17.
March wheat rose 3 cents to $5.87-1/2 a bushel on technical buying and as frigid temperatures raised concerns about declining U.S. crop conditions.
A winter storm brought much needed snowfall to the southern U.S. Plains and snow blanketed much of the Midwest as well, protecting crops from frigid temperatures expected in the next few days.
“The market knows the winter wheat crop is resilient so it is hard to get too excited about crop damage until the crop breaks dormancy,” said Kayla Burkhart, broker for SunPrairie Grain.
March corn edged up 1-1/2 cents to $4.43-1/4 a bushel.
Exporters struck deals to sell 236,728 tonnes of U.S. corn to unknown destinations, including 185,928 tonnes for 2013/14 delivery that ends on Aug. 31, the U.S. Department of Agriculture said on Wednesday.
U.S. corn is back on the radar for animal feed makers in the European Union because of plentiful global supplies and transport problems in core supplier Ukraine.
“Worldwide grain supplies are still very high and in the end, that is going to limit rallies in the corn price,” said Tomm Pfitzenmaier, an analyst for Summit Commodity Brokerage in Iowa.
Traders were waiting for the USDA’s next monthly supply/demand reports due Feb. 10, in which the government will update its forecasts of U.S. and world ending stocks of corn, soy and other crops.
