Winnipeg | Reuters — Wheat futures rose on Thursday to an eight-day high as cold weather across the U.S. grain belt raised fears of crop damage and major importers returned to the market following a recent drop in prices to a 3-1/2-year low.
Corn followed wheat higher, but soybeans finished slightly weaker.
“Wheat’s caught a bit in a perfect storm,” said Jim Gerlach, president of A/C Trading in Fowler, Indiana. “You’ve got the cold temperatures… (and) there’s no question demand has responded.
“It’s not difficult to see a rally in the wheat market — what’s difficult is sustaining one.”
Chicago Board of Trade March wheat rose 1.6 per cent or 8-3/4 cents to settle at $5.70 a bushel (all figures US$). The front month contract touched $5.78, the highest since Jan 15, but remained in striking distance of a 3-1/2-year low of $5.60-1/2 set earlier this month due to large global wheat supplies.
Frigid weather settled into the U.S. Midwest and eastern Plains this week, but even colder temperatures early next week could threaten some of the U.S. soft red winter wheat crop, agricultural meteorologist Don Keeney of MDA Weather Services said on Thursday.
Snow this weekend should help insulate wheat in the northern and eastern Midwest, but the crop looks more vulnerable across the western Midwest and eastern Plains, resulting in possible winterkill damage by Tuesday and Wednesday, Keeney said.
“Some damage is likely to wheat in about a quarter of the Midwest belt and about 10 per cent of the Plains belt,” he said.
The extent of any damage, however, won’t be clearly known until wheat comes out of its dormancy period, or even as late as the harvest, Gerlach said.
The cold weather stretching from the Plains to the East Coast is also seen boosting demand for corn and soymeal as livestock burn more calories in trying to keep warm.
Saudi Arabia seeks wheat
Demand from offshore buyers, linked to recent price weakness, also bolstered wheat.
Saudi Arabia’s state grains authority GSFMO has issued an international tender to buy 660,000 tonnes of wheat, European traders said on Thursday.
Algeria said on Wednesday it had bought around 500,000 tonnes of milling wheat, and Iraq purchased a total of 350,000 tonnes of hard wheat.
CBOT March corn rose 0.7 per cent or 2-3/4 cents to $4.29 a bushel, pulled higher by wheat and talk of increased feed demand due to chilling U.S. Midwest temperatures.
Soybean prices moved off the prior session’s two-month low early, due to bargain buying, but weakness in the cash market dragged the futures lower into the close.
CBOT March soybeans shed 0.2 per cent or 2-1/2 cents to settle at $12.77 a bushel. The front month fell to a low of $12.72 on Wednesday, its weakest level since Nov. 20, 2013.
— Rod Nickel is a Reuters correspondent based in Winnipeg. Additional reporting for Reuters by Mark Weinraub in Chicago, Nigel Hunt in London and Naveen Thukral in Singapore.