Grain, Soybeans Skyrocket Ahead of July 4

04.07.2017

Wheat futures hit new highs on Monday, yanking other grain and soybean contracts higher as traders jostled for position ahead of the July 4 break.

Futures for spring wheat, a higher-protein grain that has been hit by drought-like conditions in the northern Plains, popped above $8 a bushel at the Minneapolis Grain Exchange for the first time in over three years. Other wheat classes traded at the Chicago Board of Trade also climbed to multiyear highs.

That strength in turn helped carry corn and soybean contracts, which jumped out of recent ranges to close at multiweek highs. Those crops have been hit by mounting weather concerns of their own, with some forecasts showing the hot-and-dry Plains weather shifting eastward into the Midwest during corn's critical yield-forming phase.

All this amounted to a pre-Independence Day "CBOT fireworks" display as traders sought to pull out of bets that prices would fall, said research firm AgResource.

"July is the month that makes or breaks corn and traders are well aware of this fact," the firm said in a note to clients. "The market is quickly adding considerable weather premium."

Data from regulatory body the Commodity Futures Trading Commission on Friday showed that managed funds had extended net short positions to over 100,000 contracts in both corn and soybean futures and options.

But increased risk to the crops in light of the poorer weather forecasts had traders scrambling out of those pessimistic bets, analysts said.

MGEX July spring wheat futures rose 5.8% to $8.12 a bushel, while CBOT July winter wheat climbed 5% to $5.36 3/4 a bushel--the highest in a little under two years.

CBOT July soybean futures rose 2.4% to $9.64 3/4 a bushel. Corn gained 2% to $3.78 a bushel.

Analysts said a government report Friday that showed lower-than-expected soybean and wheat acreage, as well as below-expectation oilseed stockpiles, were also supportive.

Updated estimates from the USDA put spring wheat acreage at 10.9 million acres, below the low end of expectations. Soybean acreage of 89.5 million also fell short of pre-report predictions, though that was nevertheless a record.

"The fact that [the report] wasn't quite as negative... was kind of a relief for anybody hoping this market could bounce," said Dax Wedemeyer, a broker at U.S. Commodities in Des Moines, Iowa. "And you're getting the weather on top of that."


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