By Kirk Maltais


-- Corn for December delivery rose 2.7% to $5.05 1/4 a bushel on the Chicago Board of Trade on Thursday as fund traders covered sizable short positions ahead of the weekend in preparation for unforeseen developments in the Israel-Gaza conflict.

-- Wheat for December delivery rose 2.4% to $5.94 a bushel.

-- Soybeans for November delivery rose 0.5% to $13.17 a bushel.


HIGHLIGHTS


Assume the Position: Short covering was the main factor providing support for grain futures Thursday, with the short-covering rally looking to extend into Friday, said AgResource in a note.

"Traders do not want to walk into work on Monday with an escalation of the Israeli war and energy prices ripping to the upside," said the firm.

In its last Commitments of Traders Report, the CFTC says fund traders hold a net short of over 150,000 contracts for wheat, and over 110,000 contracts of corn.


Growing Demand: In addition to a positive export sales report, analysts said there are signs demand for U.S. soybeans is growing.

"Basis bids for soybeans and corn shipped by barge to U.S. Gulf Coast terminals rose on Wednesday, reflecting increased demand from exporters," said Naomi Blohm of Total Farm Marketing in a note.

In Thursday morning's export sales report from USDA, soybean sales landed on the high end of trader estimates, at 1.37 million metric tons. However, signs of growing export demand gave them only limited support.


INSIGHT


Locking in the Low: The trend of lower grain futures prices in response to farmers harvesting may soon end, said Ira Epstein of Linn & Associates, despite a smooth harvest that appears to be flowing a lot of new inventories into bins.

"Farmers are harvesting what will likely be the country's third-largest crop ever," he said in a note. "Of interest is that the market is holding up, increasing the odds that a harvest low is in place."

The concept of "harvest lows" is a sentiment among traders that futures tend to turn lower in September and October, before turning around at the end of the year.

CBOT grains have been under pressure since the late summer, with traders taking an increasingly short position on futures as harvesting progresses without any major hiccups.


River Rebound: Record-low water levels found in the Mississippi River earlier this month are expected to ease in the latter half of October into November, but that won't immediately relieve issues with shipments on the river, said the USDA in its weekly Grain Transportation Report.

"Despite some recent rain, more rain will be needed to raise water levels enough to improve navigation conditions," said the agency. "Water levels are projected to rise by late October and early November, but navigation conditions are not expected to improve before late December or early January."

Low water levels make the river tough to travel for barges carrying grain, hurting U.S. grain exports.


AHEAD


-- The USDA is scheduled to release its monthly cattle on feed report at 3 p.m. EDT Friday.

-- The CFTC is due to release its weekly Commitments of Traders Report at 3:30 p.m. EDT Friday.

-- The USDA is scheduled to release its weekly grains export inspections report at 11 a.m. EDT Monday.

-- The USDA is due to release its weekly crop progress report at 4 p.m. EDT Monday.


Write to Kirk Maltais at kirk.maltais@wsj.com


(END) Dow Jones Newswires

10-19-23 1553ET