(Reuters) – U.S. wheat rallied on Tuesday as top global buyer Egypt purchased a cargo from the United States for the second time this month and bitter cold threatened to damage the crop, traders and analysts said.
Corn futures posted their fifth straight session of modest gains while soybeans were narrowly lower amid forecasts for a record crop in top producer Brazil.
Egypt’s main government wheat buyer on Tuesday announced the purchase of 240,000 tonnes of wheat – 180,000 tonnes from Russia and 60,000 tonnes from the United States.
The sale lifted prices, but the large volume from Russia indicated plentiful supplies there would limit the competitiveness of U.S. wheat in global markets.
“The U.S. picks up a cargo here and there, but we need to be dominant in that market (Egypt) to generate better support,” said Jefferies Bache analyst Shawn McCambridge. “We have some technical support, and maybe we hold on to some modest gains, but it’s not giving us a picture of a vibrant bull market.”
Chicago Board of Trade March wheat settled 2-1/2 cents higher at $5.66 per bushel, rising for the first time in three sessions and hovering above a recent 3-1/2 year low.
European wheat futures fell as Egypt’s move to tighten a quality specification was seen as knocking the chances of sales from France. March milling wheat on the Paris-based market was down 0.9 percent at 192.50 euros ($263) a tonne.
Egypt’s main government wheat buyer, GASC, said that it would not accept wheat containing more than 13 percent moisture, lowering its previous limit of 13.5 percent.
The move was seen as a blow to French wheat in the tender, given that France’s last harvest showed average moisture of 13.5 percent.
“This is really not good news for French wheat,” one European trader said. “There is hardly any chance at the moment of getting hold of grain with 13 percent maximum moisture.”
U.S. COLD SNAP
The lowest temperatures in decades in much of the United States underpinned prices across the grains and oilseeds complex.
The dormant winter wheat crop could be damaged in fields not protected by a blanket of snow, while icy rivers and roads in the U.S. Midwest reduced transportation of corn and soybeans to export ports and processing plants.
“You’ve got the cold weather, and while that is not a significant threat to crops, it’s something that is around and is supportive,” said Terry Linn of the Linn Group brokerage in Chicago.
But forecasts for big crops in South America, including a record 91.8 million tonne soy harvest in Brazil, anchored prices.
“Things in the Southern Hemisphere are progressing about as well as you could hope for,” Linn added. “You are going to ship significantly more beans out of Brazil in the month of February than last year.”
CBOT March soybeans finished 2-1/4 cents lower at $12.85-1/2 per bushel and were trading just above their recent 3-1/2 month low. Corn for March delivery climbed 1/4 cent to $4.32-1/4. The streak of five sessions of higher corn prices was the longest since July.
Investment funds were said to have sold 2,000 soybean contracts, bought 1,000 wheat contracts and were even in corn futures.
