U.S. grains: Wheat up as temperatures drop

(Canada Beef Inc. photo)

Chicago | Reuters –– U.S. wheat futures rose for a second day in a row on Tuesday on support from the deteriorating condition of the dormant crop and prospects for more damage from arctic temperatures across key growing areas, traders said.

“The hard red winter wheat crop is in a tough spot right now,” Matt Zeller, director of market information for INTL FCStone, said in a note to clients.

Soybean futures also rose, buoyed by concerns about dry weather curtailing production in South America and fresh export demand. Corn eased on some mild profit-taking after hitting a one-week high.

K.C. hard red winter wheat posted the biggest gain, with the March contract rising 6-1/2 cents to $6.31-1/4 a bushel (all figures US$). The most actively traded Chicago Board of Trade March soft red winter wheat contract was 2-3/4 cents higher at $5.91-3/4 a bushel.

“Perhaps the cold did worry some punters out of their shorts,” Tobin Gorey, director of agriculture strategy for the Commonwealth Bank of Australia, said in a note to clients.

Winter wheat conditions deteriorated in several U.S. states during December, particularly in Illinois, where the crop was affected by delays in planting, monthly state reports issued by the U.S. Department of Agriculture showed on Monday.

Wheat prices closed well off their session highs as traders pared gains late in the trading day due to plentiful global supplies and robust export competition.

China, which is said to have bought about 120,000 tonnes of hard wheat in past days, is likely to step up imports of higher-quality grains to meet a domestic shortfall, analysts and traders said.

CBOT March soybean futures settled up 10-1/2 cents at $10.55-3/4 a bushel.

“The biggest potential bullish scenario we have out there is on the supply side of South America,” said Terry Reilly, analyst at Futures International. “We have the first weather event of the year with hot temperatures and dry (conditions).”

Forecasts called for the key Argentine soy-growing province of Cordoba to remain dry until mid-January, which could threaten final yields.

Private exporters reported the sale of 243,000 tonnes of U.S. soybeans to China, including 123,000 tonnes for delivery in the current marketing year, the USDA said on Tuesday. The announcement follows news of another sale on Monday.

CBOT March corn was one cent lower at $4.05 a bushel.

— Mark Weinraub is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Sybille de La Hamaide in Paris.

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