U.S. wheat futures rose nearly two per cent on Wednesday, the biggest rally in two weeks, as Ukraine banned wheat exports from Nov. 15 in a move that could shift demand to the United States.
Chicago Board of Trade (CBOT) wheat surged when the benchmark December contract broke above chart resistance at its 50-day moving average of $8.81-3/4 and triggered technical buy-stops (all figures US$).
The contract later eased from the session's highs but managed to hold just above the 50-day chart point, a level which is now seen as a key technical support price.
"The surprise to me was it happened before Jan. 1. I think everyone was expecting this and it's been in the market but the fact it happened a little earlier than expected is supportive," said Brian Rydlund, a wheat analyst for Country Hedging in Minneapolis.
Wheat has risen in five of the past six trading sessions on outlooks for declining world wheat stocks and persistent rumblings that Ukraine and Russia would at some point have to halt or at least slow down exports of wheat due after drought shrunk their crops this season.
"I think that things will start to pick up in December and January. We are (a) last resort (supplier) and I think we are coming to that point on the wheat," a U.S.-based export source said.
Trade sources said Ukraine's reputation as a reliable supplier would be tested by the upcoming ban on exports adding that the U.S. had ample stocks to make up for the Ukrainian shortfall.
"We've known they were going to run out of wheat but they don't want to be an unreliable supplier," a trade source said.
"It's just a matter now if they have to default or cancel existing contracts. If that happens the U.S. could enter the picture soon but for now we're (U.S.) not competitive... but it's getting closer," he said.
"Not playing games"
Ukrainian Agriculture Minister Mykola Prysyazhnyuk on Wednesday confirmed to Reuters that Ukraine will ban wheat exports.
"There will be a full ban from Nov. 15. There will be a government order about this. We are not playing games here. We do not have any other option," he said.
Soybeans rose over one per cent, posting gains for the third day in a row and staking the biggest weekly gain since late August on strong cash markets and a fresh U.S. soy sale of just over 100,000 tonnes to an unknown destination, likely China.
Cash soybean basis bids rose from three to five cents per bushel at some processing plants in Iowa and Illinois on Wednesday.
Soybeans also found support from concerns about less-than-ideal weather in crucial South American production areas at a time when every bushel is needed to meet insatiable global demand, especially from China, the world's biggest market for the oilseed.
Corn turned weak on slow U.S. exports of corn after rallying one per cent in early dealings on spillover buying interest from strong soy and wheat, and from expectations that South American exports may start flagging.
CBOT December wheat was up 1.76 per cent, or 15-1/4 cents per bushel, at $8.84. The contract was down 0.2 per cent when Ukraine announced its export ban.
European benchmark November wheat in Paris was up 1.33 per cent, or 3.50 euros, at 266.75 euros per tonne.
CBOT November soybeans rose 1.11 per cent, or 17-1/4 cents, to $15.70-1/2 per bushel, and December corn was down 0.2 per cent or 1-1/2 cents per bushel at $7.54-1/2.
In its October crop report, the U.S. Department of Agriculture (USDA) listed Ukraine's wheat exports for the current (2012-13) marketing year at four million tonnes, down from 5.44 million the previous year.
Ukraine would have been the ninth largest global wheat exporter and would have accounted for three per cent of total world wheat exports of 130.87 million tonnes, according to the USDA's October crop data.
Corn traders said the news also led to some concern about the fate of Ukraine's corn export plans.
"Traders will focus on maize and there is no ground to expect that Ukraine will limit maize sales -- the country does not need such high stocks of this commodity," said Mykola Vernytsky from ProAgro consultancy.
"Ukrainian exporters are likely to rush as many exports as possible out of ports in the next three weeks to avoid declaring force majeure," one European trader said. "With Russia expected to leave the market, some more demand will no doubt be transferred to the U.S. soft red winter in coming months with a poor crop in Australia also looming."
-- Sam Nelson covers grain and oilseed futures markets in Chicago for Reuters. Additional reporting for Reuters by Michael Hogan in Hamburg, Naveen Thukral in Singapore and Mark Weinraub and Mike Hirtzer in Chicago.