Chicago | Reuters — U.S. wheat futures surged 5.2 per cent to their highest in nearly two months on Monday after a weekend snow storm in key production areas raised concerns about severe crop damage, traders said.
Corn and soybean futures also rallied, with wet fields across the U.S. Midwest threatening to add further delays to the already slow pace of planting.
All three commodities also benefited from short-covering following a Commodity Futures Trading Commission report released on Friday that showed speculators had built up their biggest bearish bet on record in the grains markets.
Wheat notched the biggest gains on Monday morning, as the weather outlook raised more concern for the crop that is already under stress.
“Heavy snow in western Kansas (and) southeastern Colorado causes wheat lodging,” Commodity Weather Group said in a note to clients. “Snow melts quickly and drier from Thursday to next Tuesday, but significant storm then hinders recovery of lodged Plains wheat.”
The benchmark Chicago Board of Trade July soft red winter wheat futures contract settled up 23-3/4 cents at $4.56 a bushel (all figures US$). K.C. July hard red winter wheat, which tracks the crop being grown in the U.S. Plains, was 28-1/2 cents higher at $4.65-3/4 a bushel.
The most-active CBOT wheat contract peaked at its highest since March 8 while K.C. hard red winter wheat hit its highest since March 10. In percentage terms, CBOT wheat notched its biggest gain since June 30, 2015.
“With frost through Kansas, Colorado and even stretching through to Oklahoma, the market is concerned about how much of the crop has been damaged,” said Andrew Woodhouse, grains analyst at Advance Trading Australasia.
The cold weather in the U.S. added to a spate of unfavourable weather that threatens to curtail global production.
Farming agency FranceAgriMer on Friday reported a sharp decline in crop conditions for wheat.
CBOT July corn futures were 11 cents higher at $3.77 a bushel. Corn hit its highest since March 7.
CBOT July soybeans gained 14 cents to $9.70-1/4 a bushel.
— Mark Weinraub is a Reuters correspondent covering grain markets from Chicago.