(AgWeek) – U.S. wheat futures surged 2.7 percent on Wednesday, bouncing back from near five-year lows on disappointing results from a crop tour and a crumbling U.S. dollar, traders said.
The wheat gains, the most since April 1, spilled into the corn market, which also benefited from slow farmer selling on the cash market. Soybeans weakened on a round of technical selling after prices hit a two-month high early in the session.
Scouts on the Wheat Quality Council’s annual tour of Kansas on Wednesday found prospects for the crop in the western portion of the state worse than those of last year’s drought-hit crop. Northern Kansas yields were projected at a 14-year low of 34.3 bushels per acre on Monday.
“The first stages of the U.S. crop tour (are) finding yields lower than average in some regions, which is a disappointment,” said Frank Rijkers, an agrifood economist at ABN AMRO Bank.
CBOT July wheat, the most active contract, settled up 12-3/4 cents at $4.79-1/4 a bushel. K.C. hard red winter wheat for July delivery, which tracks the crop the scouts were surveying this week, was 13-1/4 cents higher at $5.03-1/2 a bushel.
The dollar drop, stemming from a rise in European bond yields, made U.S. wheat less expensive on the world market and provided cover for speculators to cash in short positions they were holding in both corn and wheat.
“You have a market where you have a massive oversold position,” said Mark Schultz, chief analyst at Northstar Commodity Investment Co. “The funds are short this market in a major, major way.
“CBOT July corn ended 4 cents higher at $3.66-3/4 a bushel. CBOT July soybeans slipped 2-1/4 cents to $9.82-1/2 a bushel.
“Corn is being supported by some bargain buying after prices touched seven-month lows on Tuesday, while there is also hope that new blending targets for renewable fuels will be agreed by the U.S. authorities,” Rijkers of ABN AMRO said.
The U.S. Environmental Protection Agency has sent blending targets for the country’s renewable fuels program to the White House for review ahead of a June 1 deadline.
