U.S. grains: Wheat advances as Plains sizzle; corn turns higher

Chicago | Reuters — U.S. wheat futures rose to their highest in 13 months on Tuesday, led by the Kansas City market as the southern U.S. Plains wheat belt remained in the grip of sizzling heat and dryness.

Corn followed wheat higher but soybeans fell for a second straight session as large South American soy harvests eased concerns about tightening supplies of old-crop U.S. soybeans.

At the Chicago Board of Trade, most-active July wheat settled up 10 cents at $7.39 a bushel (all figures US$). The May contract reached $7.35, the highest spot price since early April 2013, before settling at $7.31-3/4.

The biggest gains were in KC hard red winter wheat, the type grown in the southern Plains. KC July wheat ended up 13-3/4 cents at $8.45-3/4 a bushel after hitting $8.55-1/2, its highest in more than 16 months.

Temperatures in parts of the southern Plains topped 100 F (38 C) on Monday, and unseasonably high temperatures and high winds persisted Tuesday.

Much of the region’s wheat, already stressed by months of drought, is in a key phase in which the heads of the plants emerge from the stalks. The U.S. Department of Agriculture said 81 per cent of Oklahoma’s wheat was heading as of Sunday along with 15 per cent of the crop in Kansas, the biggest U.S. wheat state.

“Highs were 100 to 105 F yesterday from central/southwest Oklahoma into west Texas, and similar readings today also reach into south-central Kansas before some moderation. Heading wheat will see significant loss,” the Commodity Weather Group, a meteorological firm, said in a daily note to clients.

The U.S. Department of Agriculture late Monday said 31 per cent of the U.S. winter wheat crop was in good to excellent condition, down from 33 per cent a week earlier.

“There has been a lot of increased coverage about dry conditions out west, bringing into the public view that we have some drought issues in farmland,” said Shawn McCambridge, a grains analyst with Jefferies Bache in Chicago.

Additional support stemmed from political turmoil in Ukraine and its port city of Odessa, where more than 40 people were killed on Friday in the worst day of violence since a February revolt toppled Ukraine’s pro-Russian president.

Ukraine is the No. 3 global corn exporter and a key supplier of wheat as well.

Also, the U.S. dollar fell 0.45 per cent to a 6-1/2-month low against a basket of currencies. A weak dollar makes U.S. commodities more competitive on the world market.

Traders were waiting for USDA on Friday to release its first official production estimate of the U.S. wheat crop, along with its initial forecasts for 2014-15 U.S. and world grain ending stocks.

Corn rallies

CBOT corn rallied from overnight weakness as wheat climbed, gaining against soybeans on inter-market spreads. CBOT July corn ended up 9-1/2 cents at $5.17-1/2 a bushel.

Traders continued to mull the prospect of U.S. planting delays after the USDA late Monday said the U.S. corn crop was 29 per cent seeded, lagging the five-year average of 42 per cent and behind an average of trade estimates for 33 per cent.

Farmers can seed large areas quickly if they get a window of clear weather. But many in the Midwest prefer to plant before mid-May.

“Even if you get down to the last five per cent, we are still talking about a lot of acreage that is at risk of not getting planted,” McCambridge said. “Especially if Ukraine can’t do much on the export side, there is not a lot of room to absorb losing a couple of million acres,” he said.

Some acres intended for corn may get switched to soybeans, a bearish factor for new-crop soybean futures.

Traders also noted a sharp drop in the number of corn contracts registered for delivery with the CBOT to 29 contracts as of Monday night, down from 234 a day earlier. A drop in CBOT registrations can signal a firming cash market as commercials holding the grain seek a better sale than delivering against futures.

Soybean futures fell for a second session on profit-taking and plentiful supplies in South America. CBOT July soybeans finished down 3-3/4 cents at $14.59-1/2 a bushel.

“Soybeans are being pressured by simple technical profit taking and technical weakness. Demand has slowed considerably for U.S. soybeans,” said Karl Setzer, a CTA with the MaxYield Cooperative in West Bend, Iowa.

— Julie Ingwersen is a Reuters correspondent covering crop futures markets from Chicago. Additional reporting for Reuters by Sybille de La Hamaide in Paris and Naveen Thukral in Singapore.

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