Wheat Gains on Speculation Investors Closing Bets on Price Drop

By Luzi Ann Javier

Dec. 10 (Bloomberg) -- Wheat futures rose, ending a seven- day decline that was the longest losing streak in more than a year, on speculation that some investors were closing bets that prices will drop by quitting so-called short positions.

“People are just profit-taking,” Toshiro Horiguchi, assistant general manager at Agrex Asia Pte, said by phone from Singapore today. Still, wheat prices may extend falls on concern that there is a global oversupply, Horiguchi said.

Speculative shorts had outnumbered bets that prices will rise by 1,693 contracts on the Chicago Board of Trade in the week ended Dec. 1, the Commodity Futures Trading Commission said in a report. Futures fell 9.1 percent this month to yesterday.

Wheat for March delivery added as much as 0.6 percent to $5.385 a bushel, before trading at $5.3675 at 1:49 p.m. in Singapore. The seven-day drop to yesterday was the longest series of declines since September 2008.

Global wheat stockpiles are forecast to rise for a second year to 188.3 million metric tons in the 2009-2010 marketing year as output exceeds demand, according to a U.S. Department of Agriculture report on Nov. 10. The agency is scheduled to release its latest supply-and-demand estimates later today.

Wheat planting in France, the European Union’s largest grower, will expand 3 percent to 4.89 million hectares (12.08 million acres) next year as farmers shift from less profitable barley, FranceAgriMer, the national crops office said yesterday.

Corn Declines

Corn for March delivery fell for a second day, losing as much as 0.4 percent to $3.82 a bushel, reversing a 0.4 percent gain earlier. The contract traded at $3.825 at 2:12 p.m.

Korea’s Major Feedmill Group bought 110,000 tons of corn from Cargill Inc. late yesterday, two executives who participated in the biddings said today, declining to be identified as the tender results are confidential. The group paid $227.49 a ton for 55,000 tons from either the U.S. or South America, and $228.49 a ton for the rest from the U.S., they said.

Separately, the Korea Feed Association, South Korea’s biggest grain-buying group, purchased 55,000 tons of U.S. corn from Archer-Daniels-Midland Co. at $229.99 a ton in a private tender earlier this week, the executives said.

January-delivery soybeans fell as much as 0.9 percent to $10.19 a bushel, and last traded at $10.2025.

Rice for March delivery rose 0.9 percent to $15.95 per 100 pounds in Chicago at 1:23 p.m. Singapore time, after jumping 2.6 percent yesterday to the highest since Jan. 7.

Traders on Dec. 8 offered to sell rice to the Philippines for at least $618.95 a ton, 30 percent more than the average price paid by the government in November. Hedge funds and speculators are making the most bets in 19 months that prices will rise, echoing conditions in 2008, when grain shortages forced India, the Philippines and Egypt to boost subsidies.

“The bulls are out there,” said Peter McGuire, managing director at CWA Global Markets Pty. “There’s wonderful money to be made. You’ve just got to have nerves of steel.”

To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net