U.S. wheat futures jumped to a five-week high Friday after the U.S. Federal Reserve's announcement of a new round of stimulus measures triggered broad gains in commodity markets.
Corn futures also advanced, but soybeans slipped on profit-talking before the weekend and expectations that the advancing U.S. harvest will bring fresh supplies to market. Soybeans have pulled back 3.2 percent since reaching a record high last week on crop concerns.
"Harvest is definitely within reach," said Rich Feltes, vice president of research for R.J. O'Brien.
Expectations for a flow of new supplies encouraged traders to sell nearby soy contracts and buy deferred contracts in spread trades, Feltes said.
Traders are watching harvest progress closely after the worst U.S. drought in half a century devastated crops this summer, sending corn and soy prices to record highs.
November soybeans on the Chicago Board of Trade were down 0.1 percent to $17.46 a bushel by 1:30 p.m. Central time, while December corn had risen 1.3 percent to $7.84 a bushel. CBOT December wheat stood at $9.20-3/4 a bushel, up 2.1 percent.
HARVEST RAMPS UP
The soybean harvest, which was 4 percent complete as of Sunday, is picking up speed and could be close to 10 percent finished by the end of the weekend, said Don Roose, president of U.S. Commodities. The corn harvest, which was 15 percent complete last Sunday, could be nearly 22 percent complete by Monday.
"I think we're at reality now where we're at harvest," Roose said.
Traders are keeping an eye on demand for soybeans, even as new supplies come in, amid concerns that more rationing of global demand may be needed due to poor crops in the United States and South America.
The U.S. Department of Agriculture, in a closely watched supply-demand report on Wednesday, estimated this year's U.S. soybean harvest at 2.634 billion bushels, down from last month's estimate of 2.692 billion and below analysts' average estimate of 2.657 billion.
"We expect to see further price increases that will erode demand and keep inventories in the U.S. at a certain minimum level in the wake of the drought-related harvest losses," Tiberius Asset Management said in a report.
Risk assets were boosted after the Fed on Thursday said it was launching a third round of bond buying to pump $40 billion into the economy each month until the U.S. jobs market shows a sustained improvement.
The decision pressured the U.S. dollar, raising the allure of commodities priced in a weaker U.S. currency. The move was particularly supportive for wheat due to steep competition for export business.
The Fed move "makes our goods more affordable in the global marketplace," said Kayla Burkhart, a broker for SunPrairie Grain.
"The optimism about demand and general 'sell the dollar, buy commodities' sentiment work together to pull grain futures higher," she said.
Egypt bought 235,000 tonnes of Russian, French and Ukrainian wheat on Thursday in its seventh international tender in a month and second for the week.
The world's top wheat importer, Egypt has been making purchases amid concerns in the market that supplies are dwindling in the Black Sea region due to drought. Some traders suspect Russia may curb exports, although the government has said it will not.
(Additional reporting by Julie Ingwersen in Chicago, Nigel Hunt in London and Naveen Thukral in Singapore; Editing by Andre Grenon and Alden Bentley)