CHICAGO- Chicago wheat futures exploded to a five-month high due to threats to global production and as fund scrambled to cover their short positions in the post-holiday market, traders said.
The wheat rally gave support to Chicago corn futures, which hit a three-week high on the day, a day after the US Thanksgiving Day holiday. Soybean futures fell on growing US-China tensions.
Wheat futures rose on a mix of technical and emerging bullish fundamentals, including rising cash values for US and Russian supplies, wet weather in Europe and Australia, and fears of a decline in US acreage, traders said.
But traders said it was the funds scrambling to cover their positions that mostly fuelled the rally, amid news that there were no deliveries against the CBOT December wheat WZ9 contract on first notice day on Friday.
“In these low liquidity markets, when you have a bigger fish jumping into a smaller pond, they can really make a huge splash,” said Daniel Hussey, senior market strategist at Zaner Group.
Adding to that support was the US Department of Agriculture weekly wheat export sales data on Friday, which showed sales were slightly above analysts’ expectations, said Jason Roose, analyst for US Commodities.
The most active Chicago wheat futures contract ended the day up 2.9 percent, closing at $5.41-3/4 a bushel.
Corn futures also were bolstered by heavy snowfall forecasts in the northwest US corn belt in the coming days, and farmers expected to face very slow progress in harvesting an estimated 8 million remaining acres of crop.
The most active CBOT corn contract settled the day up 2.08 percent at $3.81-1/4 a bushel.
Meanwhile, Chicago soybean futures slumped to an 11-week low on Friday with the market closely watching for updates on US-China trade talks, and traders less than impressed with a jump in recent soybean export sales between the two countries.
Concerns over US-China trade tensions resurfaced after China rebuked US President Donald Trump’s decision to ratify a bill backing protesters in Hong Kong. China said on Thursday it would take “firm counter measures” if the United States continues to interfere in Hong Kong. – Reuters