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. Rice, soybeans and corn also gained.

Futures rose the most in a month July 25 after Poland said its grain output will fall by as much as 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. Rice jumped the most in almost two months.

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

Wheat for September delivery added as much as 2.6 percent to $8.32 a bushel in after-hours electronic trading on the Chicago Board of Trade. It was at $8.25 at 4:07 p.m. Singapore time. The futures have risen 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 total grain production 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.

Rice

Rice rose the most since June 6 today on speculation that Iran is seeking to buy at least 100,000 tons of Thai rice and Bahrain 40,000 tons of Hom Mali rice under government-to- government deals, Bangkok Post reported today.

The rough rice futures for September delivery rose as much 3 percent today to $17.215 per 100 pounds today, before trading at $17.155 at 4:03 p.m. in Singapore.

``Export prices of white rice will likely continue an upward pressure in the next couple of months'' because of a shortage of rice available in the Southeast Asian markets, said the U.S. Department of Agriculture in a report dated July 22.

Thai white rice export and local prices rose by around 3 to 7 percent in the week ended July 21 as the government intervention program is fully implemented, the report said.

The Vietnamese government has also revised up floor prices of 5 percent grade white rice exports to $750 a ton from $720, free-on-board in the previous week, the report said.

CFTC Report

Hedge-fund managers and other large speculators reversed from a net-short position to a net-long position 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, exceeded 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 $14.0750.

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 $6.0450 as of 4:05 p.m. Singapore time.

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