Wheat Jumps as U.S. Data Show Winter Crop Size May Disappoint

January 12, 2016 12:50 PM

Wheat prices jumped in trading Tuesday, striking a rare bullish note amid a generally gloomy outlook for commodities, after a U.S. government report showed a potential smaller-than-expected winter crop.

Wheat futures gained as much as 2.9 percent in Chicago, erasing earlier losses, while corn climbed as much as 3.4 percent and soybeans 2.3 percent.

U.S. farmers sowed 36.61 million acres of winter-wheat varieties, the U.S. Department of Agriculture said in a report. That was less than the lowest estimate in a Bloomberg survey of analysts. The plantings would be the lowest since 2010, according to USDA data.

Separately, in the USDA’s World Agriculture Supply and Demand Estimates (WASDE) report, U.S soybean output for 2015 was shown to at 3.93 billion bushels, trailing the 3.978 billion average estimate. For corn, the USDA numbers showed American inventories were 11.212 billion bushels at Dec. 1, missing the 11.246 billion-bushel average estimate.

Prior to the government data’s release in Washington, the Bloomberg Commodity Index, a measure of returns from 22 raw materials, fell to its lowest since at least 1991. Oil slid to less than $31 a barrel while metal prices declined. Hedge funds are the most pessimistic ever on grain prices after previous increases in stockpiles of corn and soybeans, according to U.S. data as of Jan. 5.

“The funds had such a big short position and were expecting a big down day,” Ted Seifried, chief market strategist at Zaner Group LLC in Chicago, said by phone, referring to crop prices. “The fact that they didn’t get that, I think they’re running for the door.”

Wheat futures for March delivery gained 2.9 percent to $4.7975 a bushel at 11:41 a.m. on the Chicago Board of Trade. Soybean futures for March delivery rose 1.9 percent to $8.775 a bushel, while corn futures for March delivery gained 1.7 percent at $3.5775.

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