Chicago grains, soybeans continue to rally on short-covering

Chicago Board of Trade (CBOT) wheat, corn and soybean futures on Wednesday closed all higher for a second straight session on technical buying as traders and producers squared positions ahead of a U.S. government agency crop report due early next week.

Soybean futures led the gains as the most active soybean contract for March delivery rose 7.5 cents, or 0.87 percent, to close at 8.6475 dollars per bushel.

Meanwhile, March wheat delivery rallied 1.5 cents, or 0.33 percent, to close at 4.6275 dollars per bushel while corn for March delivery added 0.25 cents, or 0.07 percent, to close at 3.5325 U.S. dollars per bushel.

As the U.S. Department of Agriculture (USDA) is scheduled to release its annual crop production report on Jan. 12, investors are looking to reduce their market exposure amid the CBOT corn, wheat and soy futures being laden with large fund short positions.

Analysts said Chicago grain and soybean futures rebounded from early-session losses Wednesday as the market is prone to bouts of short covering by funds, which are currently holding very large short positions in grains and soybeans.

Informa, a private analytics firm,on Wednesday raised its estimate of Argentina's 2015-16 corn production but left its forecast of the country's soybean crop unchanged, capping gains in corn prices.

The weekly ethanol production report released by the U.S. Energy Information Administration Wednesday showed a small rise in production and a big rally in inventories, which was also seen as little bearish to corn futures. U.S. ethanol production through the week ending Jan. 1 was up 0.4 percent from the prior week, to 996,000 barrels per day, while U.S. ethanol stocks rose by 4.6 percent from the previous week. Endit