By Kirk Maltais
--Wheat for July delivery rose 2.3% to $5.23 3/4 a bushel on the Chicago Board of Trade Thursday, with managed money funds closing short positions as Russian prices continue to rise.
--Corn for July delivery rose 1.5% to $3.29 a bushel.
--Soybeans for July delivery rose 1.2% to $3.24 a bushel.
HIGHLIGHTS
Friendly Funds: Managed money funds reacted to both higher Russian wheat prices and a weaker U.S. dollar by closing out their short positions en masse. Grains traders bought 9,100 contracts-worth--or 45.5 million bushels--of wheat futures Thursday, according to AgResource. "Wheat rallied hard today, pushed up by stronger Russian values, but principally on chart buying, as we tore through swing highs like a pit bull on a one eyed cat," said Charlie Sernatinger of ED&F Man Capital.
Planets Align: A recent spat of weakness in the U.S. dollar is another factor that triggered managed money funds to close their sizable short positions across the grains complex, said Doug Bergman of RCM Alternatives. This was most evident in corn futures, where managed money funds hold a net short of 277,038 contracts according to the CFTC's last commitment of traders report. "The U.S. crop is in good shape from a national standpoint, but a lower dollar, improved ethanol data, and an overweight fund short are all supportive." said Bergman.
INSIGHT
Just Can't Quit: Despite various media reports saying that the Chinese government has ordered purchases of U.S. farm goods like soybeans to stop, the USDA has continued to announce large sales of U.S. soybean exports this week--including 120,000 metric tons announced Thursday. One reason is that China simply can't ignore U.S. soybeans on a financial level, said Arlan Suderman of INTL FCStone. "The fact is, Brazil soybeans are getting expensive due to a strengthening [Brazilian Real] and rising cash basis, and China needs beans to fill the gap ahead of next year's South American harvest," Suderman said.
Raging Rice: The grain rising the most in recent days has been rice--which is normally a low-liquidity contract. The climb of CME rough rice futures extended Thursday, with the July contract closing limit up of $1.50 per short ton at $22.065 per ton--a 7.3% uptick. That makes it 37.8% that the rough rice contract has risen since last Tuesday, when the streak began. "The most real and obvious reason is the Asian export demand which is up significantly over the past few weeks, with a fairly decent demand in the U.S. from tight supplies seen as being very real over the next few months," said Josh Graves of RJO Futures. Additionally, drought conditions in Thailand has spurred buying of rice futures, Graves said--considering that Thailand is the fourth-largest producer of rice globally, according to USDA data.
AHEAD:
--The CFTC releases its weekly commitment of traders report at 3:30 p.m. ET Friday.
--The USDA releases its weekly grain export inspections data at 11 a.m. ET Monday.
--The USDA releases its weekly crop progress report for the 2020/21 crop at 4 p.m. ET Monday.
