CHICAGO, Dec 3 (Reuters) – U.S. wheat futures turned firm on Tuesday on increased export demand and a cold snap late this week that may harm some U.S. wheat, but gains were capped by increased production prospects in Australia.
Corn and soybeans turned firm on short-covering, but gains in soy were slowed by bright soy production prospects in South America.
Gains in corn were curbed by news that China may reject U.S. corn cargoes that contain an unapproved GMO variety; additional overhead pressure on soy also stemmed from talk that a Chinese buyer may be set to reject U.S. soy cargoes as well.
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At 9:48 a.m. CST (1548 GMT), Chicago Board of Trade December wheat was up 6-1/2 cents at $6.56-1/4 per bushel, December corn was up 4 cents at $4.20-1/2, and January soybeans were up 4-3/4 cents at $13.26.
A cold snap late this week poses a threat to portions of the U.S. hard red winter wheat crop, an agricultural meteorologist said on Tuesday.
“Forecast temperatures are not quite as cold as previously, but still about 5 percent of the crop is at risk of winterkill,” said Don Keeney, meteorologist for MDA Weather Services.
Traders and analysts said the cold snap probably would not harm much of the crop and was not likely to be a major market mover.
“The Arctic blast is not a good thing since we’ll see some damage to hard red winter wheat, but we are going to see pretty good snowfall, which will help prevent a lot of harm,” said Sterling Smith, futures specialist for Citigroup.
Improved demand for wheat was a key reason for the firmer tone in the wheat market.
WHEAT DEMAND CITED
“The (wheat) market is very much focused on the demand side of the equation,” said Andrew Woodhouse, grains analyst at Advance Trading Australasia.
Egypt’s main wheat-buying agency, the General Authority for Supply Commodities, set a tender on Monday to buy an unspecified amount of wheat from global suppliers for shipment Dec. 20-31, its fifth international tender in less than a month.
Algeria and Tunisia also are tendering for wheat.
Dealers said improved crop prospects in major exporter Australia helped to limit gains.
The Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES) forecast wheat output of 26.213 million tonnes, up from its September estimate of 24.467 million tonnes.
CORN/SOY MARKET ON ALERT
News that China may be set to reject cargoes of U.S. corn was dampening gains in CBOT corn futures.
China, one of the world’s largest corn importers, is likely to reject more U.S. shipments of the grain after they were found to contain a genetically modified variety not approved by Beijing, traders said.
“If China is not going to allow imports of beans or corn due to GMO, it will certainly have a chilling affect on demand,” Smith said.
“China sees the bearish pressure from the big corn supply, and this is giving them added incentive to find a reason to reject cargoes,” he said.
Also, there are rumors that a Chinese soybean buyer is asking to wash out of at least six cargoes of soybeans that were set to be delivered in January.
The Chinese concerns, combined with bright crop prospects in South America, slowed the gains in soybean futures.
“South American weather is very good. In Brazil it’s possible to see a 90 million tonne crop, which will keep pressure on prices,” Smith said.
USDA’s latest forecast for Brazil’s soybean production for the 2013/14 marketing year is 88.0 million tonnes.
