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Roundup: Chicago agricultural commodities end higher over the week

Xinhua, April 14, 2017 Adjust font size:

Chicago Board of Trade (CBOT) grains futures close higher over the trade week which ended April 13, mostly on fund short-covering and wet weather.

Corn ended 11 cents higher weekly, settling at the highest level since early March. Fund short covering was featured, and despite a mostly bearish April USDA report, speculators were indeed excessively short (160,000 contracts) ahead of a Northern Hemisphere growing season.

Analysts mention that very little U.S. corn seeding is expected in the month of April, and as the equatorial Pacific warms an active pattern of rainfall looks to continue through early May. Parts of Western Europe and Ukraine are also much drier normal, and so some measure of premium has been added.

However, South American crops continue to get bigger, Brazil is trending wetter through late April, U.S. HRW

(hard red winter) wheat yield prospects are improving, and overall competition for world grain demand this summer is rising, not falling. As such, analysts maintain a strategy of selling rallies, but better opportunities lie ahead.

U.S. wheat markets this week rallied 5 to 12 cents, led by spring wheat contracts amid slower than expected planting -- and a likely tightening of the HRS balance sheet in 2017 even with trend yield in the U.S. and Canada.

Otherwise, the recent recovery has been centered on fund short covering, after a near-record short position was established ahead of the United States Department of Agriculture (USDA) April WASDE (World Agricultural Supply and Demand Estimates Report).

Crop potential is improving in the U.S. as the recent pattern shift to wet weather across the Plains looks to hold on through late April, and the ongoing boost in soil moisture should limit bouts of excessive heat through spring.

Western Europe and parts of the Black Sea, however, have been much drier than normal. Rainfall since March across France, West Germany, Ukraine and South Russia rests at just 35-70 percent of normal, and whether this trend continues will be watched closely.

Soybean futures fell to new lows at the April WASDE report release and then closed out the week higher on Thursday. The USDA's April update to world supply/demand estimates did not offer any significant surprises, but did confirm expectations of a larger South American crop size, as well as a slight increase in US old crop stocks.

The drop back to harvest lows found short covering, which supported higher trade into the end of the week. Fundamentally, Chinese demand remains strong while world farmers are so far slow sellers on the recent break in prices.

U.S./world supplies are record large, but analysts doubt prices fall much further until the U.S. crop is planted and the market is assured of a good start to the new crop. They think rallies back to 10 dollars will warrant both old and new crop sales. Endit