US wheat rose nearly 2 percent on Tuesday in a bounce from a five-year low, supported by broad gains in commodity and equity markets, although hefty global supply continued to keep a lid on the market. Corn and soybeans also rose as US markets reopened after a three-day holiday weekend and with investors starting to adjust positions ahead of closely watched US government crop forecasts this Friday.
Chicago Board of Trade most-active wheat contract rose 1.8 percent to $4.76 a bushel by 1144 GMT to pull away from a contract low of $4.63 set on Friday. Front-month wheat hit a five-year low of $4.55-1/2 in the previous session, although the spot September contract was thinly traded as it approaches expiry next Monday. Soybeans added 0.8 percent to $8.73-3/4 a bushel and corn rose 1.2 percent to $3.67-1/4 a bushel.
“We are seeing a bit of support for wheat around five-year low levels as there is some end-user demand,” said Paul Deane, senior agricultural economist at ANZ Bank. “But the USDA report is going to be pretty important. If it confirms high corn yields, there could be further fund liquidations as there is a bit of length there and if corn gets sold off, wheat will face pressure.”
The US Department of Agriculture’s monthly supply-demand report on September 11 will be watched for updated estimates for the US corn and soybean harvests, after the USDA wrong footed the market last month with higher-than-expected forecasts. Market fundamentals in wheat remained bearish, however, with a raised forecast for Australia’s harvest adding to ample supply in major exporting countries. Australia’s 2015/16 wheat production will be higher than previously expected, the country’s chief commodity forecaster said, as recent rains helped offset the impact of a drought-inducing El Nino.
Oil and share prices rose as investors shook off recent concerns about Chinese economic growth and welcomed strong German export data. Jitters about Chinese growth have weighed on soybeans in particular as China dominates global demand for the oilseed. China imported 7.78 million tonnes of soybeans in August, up 29 percent year-on-year but down 18.1 percent from July’s record shipments as cheap supplies from South American producers petered out.
Large speculators cut their net long position in CBOT corn futures in the week to September 1, regulatory data shows. The Commodity Futures Trading Commission’s weekly commitments of traders report also showed that non-commercial traders, a category that includes hedge funds, increased their net short position in CBOT wheat and soybeans.