Chicago wheat futures soared more than two per cent on Thursday amid expectations that the world's No. 4 exporter Russia could soon run out of supplies, forcing some demand to shift to the United States, the top shipper of the grain.
The expectations stemmed from a large purchase of wheat from the Black Sea region, including Russian, by Egypt's main state-run wheat buyer, the General Authority for Supply Commodities (GASC).
While the purchase of 475,000 tonnes of wheat from Russia, Romania and Ukraine at an international tender highlighted how high prices had made U.S. supplies uncompetitive, it also raised the question if Egypt, the world's top wheat importer, was trying to grab as much Russian wheat as possible before any move by Moscow to limit sales -- as persistently speculated.
Russia has repeatedly denied that it would ban exports -- as it did in 2010 after a historic drought and sparking a major rally in prices -- due to a poor crop this year.
Analysts said that Russia could run out of supplies for the export market if it maintains its current pace of sales -- it has sold Egypt's GASC 840,000 tonnes of wheat in the agency's five back-to-back tenders that began Aug. 10.
GASC vice-chairman Nomani Nomani told Reuters in Cairo that rising prices for Russian wheat could make supplies from other countries more price-competitive and said he wanted to clarify how much Russian wheat would be available for export.
Leading Russian grain analyst Dmitry Rylko, head of the Institute for Agriculture Market Studies, told a conference in Moscow that Russia could import as much as 2.5 million tonnes of wheat from neighbour Kazakhstan.
"Russia could be out of the market by the end of October," said grains analyst Dan Basse, who's with AgResource Co. in Chicago and has clients in the Black Sea region. "People could be forced to buy from the United States or Canada."
December wheat futures at the Chicago Board of Trade ended 2.8 per cent higher at US$8.9 1-3/4, with the market adding to earlier gains after the GASC tender results were announced.
Paris wheat futures ended up 0.6 per cent at 261.5 euros per tonne.
CBOT November soybeans ended 1/2 cent lower at US$17.47 per bushel, while December corn rose one per cent to US$7.98-1/2.
Soybean futures fell for a second consecutive session on expectations that recent rainfall had helped to recoup some losses from the worst drought in half a century, but the market pared the losses near the close on bargain buying.
There were some expectations for the USDA to raise its estimate of the soybean yield in its next update of the crop in its supply-demand report on Sept. 12, due to rains in recent weeks in the northern and eastern Midwest helping the crop.
"Soybeans are down on the FC Stone estimate that actually increased soybean production, the rains apparently have stabilized beans but not corn," a trader said.
Soybean futures were also weighed by a sharp drop in prices in the cash markets before the Midwest harvest gets underway and on expectations that farmers will step up sales.
Closely-followed trade house FC Stone on Wednesday pegged the 2012 U.S. soybean crop at 2.739 billion bushels, above the U.S. government's forecast for 2.692 billion. However, the firm pegged corn output at 10.607 billion bushels, below the government forecast for 10.779 billion.
Corn futures were higher on forecasts for low U.S. corn output this year following the summer long drought and relentless heat that slashed corn yield prospects.
A large sale of U.S. corn totalling over 200,000 tonnes to an unknown destination as reported by USDA also helped support prices. Export demand had been dented by prices rising to record highs this summer.
-- K.T. Arasu and Sam Nelson
write for Reuters from Chicago.