U.S. grains: Wheat up most since October on chill fears

U.S. wheat futures surged 1.5 per cent on Friday, rebounding from the lowest level in about 20 months and posting their best daily gain since October, amid fears arctic temperatures could damage the dormant crop in the U.S.

Wheat futures gained despite missing export business from top global buyer Egypt, which purchased 535,000 tonnes of the grain instead from France, Romania, Russia and Ukraine. Algeria, another top buyer, also bought wheat, 500,000 tonnes, likely from France, European traders told Reuters.

“(Wheat) started to firm up when Egypt seemed to get U.S. wheat offered cheapest in their overnight tender, and even after Egypt gave the U.S. the face push the market continued to rally,” said Charlie Sernatinger, an analyst at EDF Man Capital.

Corn and soybean futures each posted narrow gains, supported by the jump in wheat prices. Futures for each commodity traded in both positive and negative territory at the Chicago Board of Trade.

Some of the coldest temperatures in nearly 20 years are forecast early next week in the central U.S., which could harm the hard red winter wheat in the southern Plains or the soft red winter wheat in the Midwest, meteorologists said.

The cold snap, combined with a net short stake in futures from speculative investors, sparked the rally in wheat futures, which fell to the lowest level since May of 2012 in the previous session.

“We broke hard yesterday, and the open interest went up 7,000. You got people caught short under the market now,” Sernatinger added.

CBOT March wheat ended 8-3/4 cents higher at $6.05 3/4 cents per bushel (all figures US$). Still, futures lost 0.3 per cent for the week in the fifth straight weekly decline.

Corn for March delivery gained three cents to $4.23-1/2, snapping a three-session streak of losses, but easing for the second week in a row. March corn futures early in the session notched a contract low of $4.17 after China canceled more shipments of U.S. supplies because they contained an unapproved strain of genetically modified grain, traders said.

China, the No. 3 importer of U.S. corn after Japan and Mexico, has canceled numerous cargoes of U.S. grain since mid-November after they were found to contain Syngenta’s MIR 162 corn, a GMO variety not approved for import by China. The U.S. Agriculture Department in its weekly export sales released early on Friday showed net a cancellation of 116,000 tonnes of corn to China.

Corn was the worst-performing commodity in 2013, shedding some 40 per cent for the year.

“Corn is basically dead in the water. There’s not a lot to support corn,” said Karl Setzer, an analyst at MaxYield Cooperative in West Bend, Iowa.

Most-active March soybeans settled two cents higher at $12.72, but plunged more than some three per cent for the week in the worst weekly performance since November.

USDA will release its final production forecast for the 2013-14 marketing season next week. Many analysts expect the agency to increase the size of the crops. The U.S. corn crop already is record-large, while the soybean harvest was the third biggest in history.

Also on Friday, closely watched analytics firm Informa Economics boosted yield estimates for both the U.S. corn and soybean crops, but reduced their estimate for the corn crop in Brazil.

– Michael Hirtzer reports on ag commodities for Reuters from Chicago. Additional reporting for Reuters by Julie Ingwersen, Christine Stebbins and Karl Plume in Chicago, Colin Packham in Sydney, and Valerie Parent and Michel Rose in Paris.