By Jacob Bunge
U.S. grain and oilseed futures jumped Tuesday, reversing a spate of selling prior to the Christmas holiday.
Contracts climbed as traders exited earlier bets that prices would fall, and speculated that Friday's declines spelled an attractive entry point, though the markets overall were lightly traded in the first full session of the week.
Wheat futures led the gains, rising 4.1%, while soybean contracts climbed 2.6% and corn 2.7%.
"People are always out searching for post-Christmas bargains and maybe that mentality has bled over to the grain trade this morning as it would seem it would be difficult to find a better value," wrote Dan Hueber, general manager of the Hueber Report, an Illinois-based futures brokerage and newsletter publisher.
Grain futures drew some support from weather forecasts that showed warmer and drier weather ahead for northern Brazil, a key crop-producing region, at a time when soybean plants are maturing and could be susceptible to low moisture. A heat wave at the wrong time could trim Brazilian soybean production and further tighten global supplies for the oilseeds, forcing vegetable oil makers and animal feed millers to pay higher prices for soybean meal, or leading them to purchase grain-based alternatives.
Weekly grain export inspections detailed by the U.S. Department of Agriculture also showed a larger-than-expected increase for wheat, while corn and soybeans also gained, according to Dan Cekander of DC Analysis LLC.
Mainly, though, analysts attributed Tuesday's gains in the market to traders shuffling positions prior to 2016's end. Friday's selling, which pushed soybeanfutures to their lowest closing price in five weeks and corn to a three-week low, provided a signal to some traders to close out short positions that pay off when prices fall, a process that involves buying contracts.
Friday's declines also provided signals to some statistics-based futures trading models that contracts had fallen to attractive levels, analysts said. And the price moves came as overall trading activity was low, which can exacerbate market swings.
March-dated wheat contracts gained 16 cents to settle at $4.09 1/2, the highest closing price since Nov. 8. The gain nearly erased the previous five trading sessions' steady declines.
January soybean futures added 25 3/4 cents to close at $10.14 3/4 cents a bushel, more than making up losses from late last week. Since the end of November, soybean futures remain 1.7% lower.
March corn futures also posted the first winning session in the past six trading days, closing 9 1/4 cents higher at $3.55 a bushel. Since the beginning of the month, corn futures have gained 5.4%.
--Write to Jacob Bunge at firstname.lastname@example.org
(END) Dow Jones Newswires
December 27, 2016 15:13 ET (20:13 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.