By Kirk Maltais

--Soybeans for March delivery rose 2.6% to $13.47 a bushel, on the Chicago Board of Trade on Tuesday, with traders showing general bullishness toward commodities by buying grains.

--Wheat for March delivery rose 1.9% to $6.54 a bushel.

--Corn for March delivery rose 1.7% to $4.91 3/4 a bushel.

HIGHLIGHTS

Full Steam Ahead: Big net-long grain positions held by managed money funds continued to swell in a bullish commodities environment, AgResource said. "An inflow of fresh investment funds along with end user pricing has sparked the strong [morning] CBOT rally," said the firm, adding that more money is expected to flow into the space. According to the last commitment of traders report from the CFTC, corn and soybeans both have sizable net long positions among funds - with corn's net long at over 300,000 contracts.

Other Factors: Bullishness surrounding commodities linked to a weakening U.S. dollar isn't the only reason grains got a boost. "The primary driving fundamental factors of the market remain the need for rationing and South American weather," said Karl Setzer of AgriVisor. "Price rationing has been more difficult this year as the United States is the only source for product at this time and buyers are willing to pay elevated values for coverage."

INSIGHT

Improving Picture: Wheat futures may have limited upside going forward, said Terry Reilly of Futures International. "Kansas winter wheat crop ratings increased to 46% good/excellent from 33% at the end of November, according to state data," said Mr. Reilly, pointing to the improvement of wheat conditions there as limiting the squeeze on prices that weather concerns have brought. Snow and rain is expected in the Midwest this week, which is supportive for winter wheat crops.

Shrinking Pile: Next week's WASDE report will update forecasts for crops grown for the 2020/21 marketing year. For soybeans in particular, the new report is expected to show an even tighter supply situation than previously estimated, one explanation for why CBOT soybean futures have rallied, up more than 17% in the past month alone. The USDA has projected stocks at just 3.9% of expected usage, said Arlan Suderman of StoneX, noting that this is the second-tightest usage on record. "The market is pricing in expectations that stocks will draw closer to a record 2.5% of annual usage."

Growing Optimism: Positive sentiment among U.S. farmers climbed over the past month, according to data from Purdue University and the CME Group. According to their Ag Economy Barometer, farmer sentiment rose 7 points in December to a score of 174. The generally positive sentiment stems from high grains prices of recent weeks, with grain futures currently trading at or near six- or seven-year highs across the board.

AHEAD

--The EIA will release its weekly ethanol production and stocks report at 10:30 a.m. ET Wednesday.

--The USDA will release its weekly export sales report at 8:30 a.m. ET Thursday.

--Conagra Foods will release its fiscal second quarter 2021 earnings before the stock market opens Thursday.

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

(END) Dow Jones Newswires

01-05-21 1535ET