CHICAGO (Reuters) - U.S. grain markets rallied on Wednesday, with corn up 3.3 percent, tracking gains in other commodities as the dollar weakened and investors waded into riskier assets on growing hopes for a solution to the euro zone debt crisis.
At the Chicago Board of Trade, corn climbed to near a two-week high while soybeans hit a one-week high, rising 2.7 percent for their biggest daily gain since March 30. Wheat also rose as the greenback lost ground to the euro after the European Central Bank left interest rates unchanged, as expected.
Argentine farmers halted grain sales in the first day of a week-long strike over a government tax increase, which supported the market. Months of farmer protests caused major disruption to the country’s food shipments four years ago, but this week’s strike is not expected to delay exports.
“These markets have exhausted the selling interest,” said Shawn McCambridge, an analyst at Jefferies Bache in Chicago.
CBOT July corn gained 18-3/4 cents to $5.86-1/4 per bushel while CBOT July wheat was up 11 cents at $6.24-1/4, a rise of 1.8 percent, with each contract rebounding from declines on Tuesday.
“We got a reprieve from the bearish demand-related sentiment and fund-related selling and, all the sudden, we came back into focus on supplies,” said Mike Zuzolo, analyst at Global Commodity Analytics.
Wheat prices have been under pressure as U.S. farmers harvest the winter wheat crop in the southern U.S. Plains, while corn sank to a 1-1/2 year low last week amid expectations for a record crop this fall.
But slow farmer sales and good demand by exporters and grain users supported corn and soybeans, McCambridge said.
“Farmers are disgusted with the recent weakness in prices and we don’t have any (grain) movement to put pressure on the front end of the market,” he said.
July soybeans rose for the second straight day, adding 36-3/4 cents to $13.86-1/4 per bushel, with additional support from forecasts for lower production in Brazil, the second largest global soy producer and exporter behind the United States.
Top global commodities buyer China bought 120,000 tonnes of U.S. soybeans, the U.S. Agriculture Department said early on Wednesday in the second announcement of a large export sale to the country this week.
Investment funds bought 8,000 soybean contracts on Wednesday, most since mid-May, as well as 12,000 corn contracts and 2,000 wheat contracts, trade sources said.
The dollar index .DXY, which measures the strength of the greenback against a basket of currencies, fell 0.7 percent, making dollar-priced commodities attractive for importers.
Stocks climbed for the second consecutive day while crude oil was up about 2 percent and the Thomson Reuters Jefferies CRB index .CRB of 19 commodities gained 1.2 percent.
In the U.S. Corn Belt, mostly benign weather was forecast for the next couple of weeks with only light rainfall expected, according to AccuWeather.
“There is a clear absence of rain in most forecasts for the Midwest through at least Friday and perhaps on into the weekend and this is supportive of prices,” investor Dennis Gartman said in a note to clients.
Additional reporting by Naveen Thukrall in Singapore and Valerie Parent in Paris; Editing by Alden Bentley, Bob Burgdorfer and David Gregorio