Not since July, in the early days of the current grains rally, has wheat managed a run of six (or more) successive positive closes.

But it chalked up that feat on Tuesday, and this time thanks to its own fundamentals rather than four months ago, when it was largely hanging on to the coattails of drought-beset US corn and soybeans that gave the grain its lift.

That the drought has hung on to threaten winter wheat seedlings too was confirmed once again in the US Department of Agriculture's weekly crop progress report (the last of 2012) which showed the proportion of the crop in "good" or "excellent" health falling another point to 33%, a record low for the time of year.

'Conditions could worsen'

Nor is there any sign of the rain which could yet foster a crop recovery.

"The current long-term [official US] forecast suggests winter wheat conditions could worsen," Paul Georgy, president at broker Allendale, said.

Short-term, "warm dry conditions continue in both the northern Plains and southern Plains, and temperatures are expected to be above to much-above normal," US Commodities said.

Gail Martell at Martell Crop Projections said: "The weather forecast remains dry in the Great Plains while the new forecast calls for warming temperatures."

La Nina…

Ominously, she mentioned the "N" word too, as in La Nina, whose return could bring with it more of the heat and drought which has affected the US for so much of 2012, and South America for much of the year too.

"Persistent drought suggests a La Nina influence may be in effect," even if the main symptom, as in air pressure measures, "remains neutral", Ms Martell said.

"A ridge of high pressure has dominated south west US. No rain at all developed on the High Plains in November."

In the Midwest too, where early autumn rain largely assuaged drought, "hardly any rain has been received this month".

'Cheaper than corn'

And it is not as though wheat may be that expensive, at least relative to corn, in some locations.

In Portland, on the US west coast, "soft white winter wheat is cheaper than corn", Bill Tierney, chief economist at consultancy AgResource, said.

"At last for Asian importer of feed grain, one source of wheat is cheaper than corn."

Nor was it surprising that wheat prices were moving higher than supplies of the grain in major exporting countries were, compared with demand, "almost at their lowest in 12 years".

'Relatively cheap'

The dynamics were even enough to lure back commodities guru Dennis Gartman, who said that "because of the drought conditions in the hard red winter wheat producing states here in the US, we finally decided yesterday to buy Kansas hard red winter wheat", if hedged against a shot position in Chicago soft red winter wheat.

Kansas wheat was "relatively cheap" compared with its Chicago peer, said Mr Gartman – only two weeks after selling hard red winter wheat, holding it for some three days.

"No sooner had we bought it but the market 'reversed' to the downside," he said then.

And there is scope for speculators to get on board this time too, with regulatory data showing net long positions in Chicago and Kansas wheat well below their summer highs.

Prices rise

With some concerns over sowings in parts of Europe, namely the UK and northern France, where it has been too wet, with parts of Russia viewed as overly dry, March wheat closed up 2.9% at $8.88 ½ a bushel in Chicago.

Kansas wheat for March added 3.5% to $9.33 ¼ a bushel.

In Europe, Paris wheat for January closed up 1.3% at E273.25 a tonne, while London feed wheat for May stormed to a contract closing high of £227.00 a tonne, a gain of 1.5% on the day, and helped by data showing an upgrade to ideas for UK imports of the grain.

Wheat vs corn

Wheat's rise was supportive to Chicago corn too, given that the two grains are rivals in the feed market, and corn has its own job on trying to ration demand after a disappointing US harvest.

While "there was definitely some wheat feeding going on in the July-September time period, that price advantage has long-time passed in the Plains areas", Darrell Holaday at Country Futures said.

Furthermore, the deterioration of the hard red winter wheat crop, "has reduced the number of cattle that are on wheat for grazing and those cattle have been moved to inside the pipes and are consuming forages, corn byproducts and corn, or sorghum".

In states such as Texas, where wheat condition took an especially big drop last week, wheat grazing is common practice.

Corn for March soared 1.7% to $7.64 a bushel.

Bouncing beans

Soybeans rose in line, adding 1.7% to $14.49 ¼ a bushel for January, boosted by fresh concerns over South American crops, fears which have hardly been dampened by talk of a La Nina, which Michael Cordonnier, the respected crop scout, also flagged.

Indeed, the oilseed got an extra boost from ideas from Oil World that soybean prices were took low to take account of South American crop risks, with the consultancy also throwing light onto the recent jump in demand for US soyoil, saying it was cheaper for importers than that from Argentina and Brazil.

Soyoil itself added 1.7% for January delivery to finish at 49.58 cents a pound.

'Substantial short covering'

Country Futures' Mr Holaday reported "somewhat of a short squeeze in soyoil", in which speculators have a huge net short position, of more than 50,000 lots as of last Tuesday.

"They were not anticipating the large soyoil US export sales that occurred last week," he said.

"This has prompted substantial short covering on any price break and is a solid bid under the market."

Furthermore, there has been some speculation of a renewal of the biodiesel blenders' tax credit at the end of the year, and with it an encouragement to use more soyoil, the main raw material for the biofuel in the US.

Mr Holaday said he "questioned" the idea, "but that seems to be the consensus in the market this week".

Coffee crawls higher

Among soft commodities, New York arabica coffee eventually managed a positive close, adding 0.25% to 149.15 cents a pound for the best-traded March lot, recovering from a two-year low for a nearest-but-one contract.

The revival was helped by concern that the record level of speculative net shorts in coffee futures and options, at approaching 27,000 lots, might make hedge funds less likely to pile on more, despite increasing hopes for Brazil's 2013 harvest.

"The market today did move away from the downward momentum," Sucden Financial said.

Raw sugar for March added 0.4% to 19.23 cents a pound, boosted by the Unica report on Monday heralding the end of the Centre South cane harvest for 2012.