Grain futures rally, wheat gains amid increased Egyptian demand

Grain futures advanced on Thursday, with wheat gaining amid signs of increased demand from Egypt, the worlds largest grain importer.

On the Chicago Board of Trade, wheat futures for settlement in March rose by 0.08% to trade at $5.6888 per bushel by 13:39 GMT. Prices jumped to a session high of $5.6912, while day’s bottom was touched at $5.6588 per bushel. On January 10th, prices touched $5.6088 per bushel, the weakest level since July 2010.

Last 5-day period, wheat registered a six consecutive week of declines, the longest losing streak since October 2011. The grain slumped 22% in 2013, the largest annual decline since 2008, on expectations for a record global output, according to data by the US Department of Agriculture.

The General Authority for Supply Commodities reported yesterday that Egypt is seeking to purchase at least 60 000 metric tons for shipment between February 15-18th. The African country already signed an agreement to buy 55 000 tons of US soft, red winter-wheat on January 11th.

“If a large purchase of U.S. wheat is observed, which is possible, we might see some support come through for CBOT futures,” said Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, cited by Bloomberg.

Weather forecasting models also supported the wheat market, pointing to mostly favorable conditions in the Southern Plains. DTN reported on January 15th that colder temperatures will return during the week, but will be much less intense than the freezing temperatures that occurred during the first half of the winter period. Meanwhile, no damaging cold is indicated for the next 10 days over the Southern Plains, with mostly dry weather during this period. According to the website, the wheat crop is generally in good condition.

Elsewhere on the grains market, corn futures for March delivery increased 0.78% to trade at $4.2863 a bushel by 13:41 GMT. Futures held in a range between day’s high and low of $4.2888 and $4.2512 per bushel. On January 10th prices touched $4.0638 per bushel, the lowest since August 2010.

The grain lost nearly 40% in 2013, the steepest annual drop on record amid expectations the global output will surge to 964.3 million tons in 2013-2014 season, boosted by record production in the US, the world’s top producer.

Soybeans advance

On the Chicago Board of Trade, soybeans futures for settlement in March surged by 0.67% to trade at $13.2738 per bushel by 13:42 GMT. Prices touched a session high at $13.2762 per bushel, the strongest level since December 27th, while days low stood at $13.1662 per bushel. The oilseed settled last year 8.5% lower.

Soybeans prices were supported after it became clear weather conditions may be stressful for the developing soybeans and corn in Argentina. At the same time the weather pattern will be mostly favorable in Brazil. DTN’s January 15th forecast called for a new round of extreme heat to continue to develop in Argentina today and to remain until Saturday. High temperatures may damage the pollinating corn. The dry and hot weather may also reduce soil moisture for corn and soybeans. A cooler weather, accompanied by showers may occur during the weekend, but the coverage of the rainfall is still uncertain.

Conditions remain favorable for developing soybeans in the Brazilian producing regions, Rio Grande do Sul, Parana and Mato Grosso. According to the website, the soil moisture will be recharged by frequent episodes of scattered showers and thunderstorms and only limited hot weather. There are also mainly favorable conditions for filling to maturing soybeans and for the early harvest in northern crop areas.