Wheat prices came within an ace of retaking the $7-a-bushel mark in Chicago for the first time since June amid continued talk of firm demand, amid supply concerns fuelled by United Nations crop downgrades.
Wheat for December delivery hit $6.98 a bushel in Chicago, a three-month high for a spot contract, and a gain of 1.7% on the day, and aiming for an eighth positive close in the last nine sessions.
In Kansas City, hard red winter wheat for December rose 1.4% to hit a four-month high of $7.64 ¾ a bushel, taking gains in the last fortnight above 10%.
Strong gains were seen too in Minneapolis, hard red spring wheat gained 1.5%, and in Europe in particular in London, where the November contract soared 1.9% to close at £159.65 a tonne.
'Watching exports very closely'
The headway reflected ideas of strong demand for wheat, including in the US, despite the absence of the weekly US export sales report, which is usually released on Thursday but fell victim to Washington's government shutdown.
Rising wheat prices in China, where a poor quality harvest has left the country looking at its highest imports in years, "has use watching exports very closely", Dustin Johnson at broker EHedger told Agrimoney.com.
Furthermore, "Brazilian demand for hard red winter wheat is anticipated to continue, and that is helping the price," with the South American country seen importing more than usual following weather setbacks to the domestic crop.
And, with harvest prospects in its usual supplier of Argentina also depressed, thanks to frost and dryness setbacks, Brazil is expected to look increasingly to North America for supplies.
"I hear Brazil is still asking for offers on US wheat," Richard Feltes at broker RJ O'Brien said.
'Severe crop losses'
The extent of the squeeze on supplies was highlighted by a United Nations Food and Agriculture Organization report in which the agency cut its forecast for global wheat production in 2013-14 by 5m tonnes, to 705m tonnes, albeit still a record harvest.
The estimate for stocks left over at the close of the season was cut by 6.8m tonnes to 163.3m tonnes.
The FAO highlighted the challenges facing crops in South America, flagging "severe crop losses due to frost in Brazil and Paraguay, and reduced prospects in Argentina because of dry conditions".
The agency cut its estimate for the Argentine wheat crop to 9.5m tonnes, well below the 12.0m tonnes forecast by the US Department of Agriculture and the International Grains Council.
And it highlighted soaring flour prices in the likes of Argentina and Bolivia, where they have soared more than 80% year on year, while reaching a record high in Brazil.
Huge EU shipments
Meanwhile, one weekly export statistic which was released on Thursday, of European Union shipments, came in unusually strong, at 746,000 tonnes, the highest of 2013-14.
And he rise in wheat prices was also seen being fuelled by hedge funds' giving up on extensive short positions in Chicago futures and options.
"Wheat is something in which they have been short, and short covering is getting bigger," Mr Johnson said.
Benson Quinn Commodities said: "Wheat continues to firm on short covering as trade eyes the tightening US carryout."
Separately, Paul Georgy at Allendale reminded that "heavy rains in Ukraine are slowing planting of winter wheat and export shipments," delays which "could be good for US wheat exports".
'Finding short-covering support'
The buying spread to other grains and oilseeds too, encouraged by a turn wetter in the US weather which has slowed a harvest which, for corn especially, is already running slowly.
'Overnight rains have caused harvest to take a break," CHS Hedging said, noting that "rains overnight produced near an inch of rain in many places.
"Most of the Corn Belt is forecasted to get showers over the next few days. This will cause harvest to slow."
Benson Quinn Commodities said that "markets are finding short-covering support, with a wetter forecast ahead likely to cause harvest delays into next week, limiting hedge pressure".
'Swelling crush margins'
This is in particularly an issue for soybeans, for which supplies remain tight thanks to last year's disappointing harvest, but with demand strong, thanks to decent processing margins in the US and importing countries.
"Increasing export demand for soymeal is helping soybeans bounce higher as crush margins swell," Benson Quinn Commodities said.
"This is also being reflected in the cash market as domestic bids have a firmer tone while crushers look to secure supplies."
In fact, US crush margins are at about $0.80 per bushel, "so processor demand is under the market and helping to support the basis", US Commodities said.
Soyoil vs soybeans vs soymeal
Furthermore, seasonally, it is a strong period for soybean prices too, with November soybean futures "a buy on October 4 and exit October 20 - 80% of the time the market moves up $0.42 a bushel", according to the broker.
Soybeans for November stood 1.0% higher at $12.87 a bushel in late deals, when December soymeal stood up 0.8% at soymeal up $415.00 a short tonne,
Soyoil for December did better still, soaring 1.9% to 40.14 cents a pound, again fuelled by short-covering. Hedge funds were 24,500 lots short in the vegetable oil as of last Tuesday, compared with long positions in soybeans and soymeal.
Corn, which continues to feel pressure from ideas that the US yield will prove far higher than had been expected, stood 0.2% higher at $4.40 a bushel.
Among soft commodities, cocoa proved weak, dropping 1.8% to $2,585 a tonne in New York for December delivery on a move deemed largely technical, after the bean continued to fail to breach its mid-September high of $2,657 a tonne.
The decline saw the lot close below its 20-day moving average for the first time in a month.
But robusta coffee for November achieved something of a chart positive in, having retaken its 10-day moving average in the last session, closing above its 20-day in this one for the first time since mid-August.
The improved technicals, in the face of strong expectations for the Vietnamese harvest, which depressed values last week to a three-year low, helped the November contract close up 2.0% at $1,700 a tonne in London.