by Agrimoney.com
Grain futures extended their recovery as China made fresh purchases, extending a theme, in wheat, of rising demand underlined by the return of top importer Egypt to tender.
September wheat futures and December corn futures, the best-traded contracts, set course for a second day of gains – after on Tuesday posting their first headway in nine sessions.
The gains were attributed by traders in part to short-covering ahead of the July 4 Independence Day holiday which, besides bringing no chance to trade on US markets, has often preceded volatility in the past.
At broker Allendale, Paul Georgy said: "We must plan ahead for July 5. Historically, corn and soybeans have sharp moves on the first trading day after the holiday."
Chinese purchases
However, short-covering was leant an extra gear by news of Chinese purchases, with Beijing's official CNGOIC think tank confirming the country has booked an extra three cargoes of US corn, taking the total so far this year to 2.8m tonnes.
The corn was purchased at $272 a tonne, some 400 yuan ($65), a tonne cheaper than domestic supplies, the CNGOIC said.
Separately, traders said that China had purchased 300,000 tonnes of new crop Australian wheat, following its order two weeks ago of 200,000 tonnes of French wheat.
The purchases, said to be for January delivery for the Australian order, come amid concerns over the quality of the Chinese harvest, after late rains damaged an estimated 10m tonnes of the crop.
'Definitely due to damage'
Separately, China is, through Sinograin, building state reserves too, although the Australian deal was said to have been purchased by grain trading giant Cofco for meeting more immediate market needs.
"The Australian wheat was purchased by Cofco for the market," rather than for the reserves, a Beijing-based trading manager with a global trading company told Reuters.
"The purchases are definitely due to damage of domestic wheat quality."
Supply meets demand
The deals added to ideas of firm demand for wheat spurred by the return of Egypt, the top importer, to purchases this week at its first tender since February, a hiatus attributed by traders to the country's financial difficulties.
On Tuesday Tunisia too bought 100,000 tonnes of optional origin soft wheat.
"It is a reminder that even though we are on for some strong harvests this year, demand looks like swallowing it all up," a UK grain trader told Agrimoney.com.
"Stocks are not tight, but they are not going to get any looser."
The International Grains Council on Monday forecast world grain stocks rising by 2m tonnes to 181m tonnes over 2013-14.
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