Wheat Rises for Third Day Amid Adverse Weather, Higher Demand

By Feiwen Rong

July 28 (Bloomberg) -- Wheat climbed for the third day in Asia after hedge-fund managers and speculators reversed prior bets that futures would fall amid expectations adverse weather in Europe may cut output and lift prices.

Futures rose the most in a month July 25 after Poland said its grain output will decline by 7 percent to 9 percent after drought in June and rain in July damaged wheat, rye and barley yields. Reports showing that advance orders for U.S. supplies since June 1 are 8 percent ahead of the year earlier period also fueled buying.

``Weather in Europe may delay harvest there and has become a supportive factor now in the wheat market,'' Kazuhiko Saito, chief analyst at Interes Capital Management Co., said today by phone from Tokyo.

Wheat for September delivery added as much as 21 cents, or 2.6 percent, to $8.32 a bushel in after-hours trading on the Chicago Board of Trade and traded at $8.2725 at 9:23 a.m. Singapore time. Wheat has gained 13 percent since reaching the lowest this year at $7.3075 on May 29.

Poland, the European Union's third-biggest grain producer, said wheat output will fall to 8.1 million to 8.3 million tons, according to the government statistical office. The office said its total grain output excluding corn is estimated at 23.1 million tons to 23.6 million tons.

Prices were also supported after exporters shipped 3.75 million metric tons of wheat since the beginning of the marketing year on June 1, up 30 percent from the same period a year earlier, USDA data show.

CFTC Report

Hedge-fund managers and other large speculators reversed from a net-short position to a net-long positions in Chicago wheat futures in the week ended July 22, according to the U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 3,000 contracts on the CBOT, the Washington-based commission said in a report. Last week, traders were net-short 5,345 contracts.

``Traders did position squaring ahead of the month-end because the wheat futures looked oversold,'' Saito said.

Traders also increased their net-long positions in wheat futures traded in Kansas City and Minneapolis in the week ended July 22.

Soybeans for November delivery gained as much as 34.5 cents, or 2.5 percent, to $14.21 a bushel and stood at $14.1425.

Corn for December delivery rose as much as 13.50 cents, or 2.3 percent, to $6.10 a bushel in after-hours trading on the Chicago Board of Trade and traded at $6.0525 as of 9:24 a.m. Singapore time.

To contact the reporter for this story: Feiwen Rong in Singapore at frong2@bloomberg.net