Chicago | Reuters — U.S. wheat futures surged nearly three per cent on Monday as traders responded to fresh tensions in the Black Sea region, coupled with the threat of freeze damage to crops in the U.S. Plains.
Corn and soybeans followed wheat higher, with corn buoyed by strong weekly export inspections data.
At the Chicago Board of Trade, May wheat settled up 18-1/2 cents at $6.78-3/4 per bushel, while the KC May hard red winter wheat contract ended up 22-1/2 cents at $7.42.
May corn settled up 4-1/2 cents at $5.03 a bushel and May soybeans ended up 13-1/4 cents at $14.76-1/4 a bushel.
Wheat posted the biggest gains as traders eyed weather forecasts for the Southern Plains hard red winter wheat belt. The U.S. National Weather Service posted hard freeze warnings for Tuesday morning across western Oklahoma and parts of northern Texas.
“We are looking at a freeze event in hard red winter wheat areas, this morning and tomorrow. Tomorrow morning is the concern. The forecasts are a little colder than they were Friday,” said Austin Damiani, a broker with Frontier Futures in Minneapolis.
Winter wheat becomes more vulnerable to freeze injury as it matures in the spring. Crops in the “jointing” stage of growth can be hurt when temperatures fall to -4.4 C for two hours. For crops in the more advanced “boot” stage, the threshold for damage is two hours at -2.2 C or below.
After the close of trading, the U.S. Department of Agriculture said 80 per cent of Oklahoma’s wheat had reached the jointing stage as of Sunday. In Kansas, the top U.S. wheat state, 31 per cent of the crop was jointing.
“The areas I would be most concerned about are far northwest Texas, the Oklahoma Panhandle, maybe parts of southwest Kansas,” said Don Keeney, a meteorologist with MDA Weather Services.
“I am expecting most areas will escape damage. There are freeze warnings across a wider area (for Tuesday), but I don’t think temperatures are going to get cold enough, with lows in the upper 20s,” Keeney said.
USDA said 34 per cent of the U.S. winter wheat crop was rated in good to excellent condition, down from 35 per cent a week earlier and down from 36 per cent a year ago.
Worries about the Black Sea region also buoyed the grain markets. Tensions rose after Ukraine’s president threatened military action after pro-Russian separatists occupying government buildings in the east ignored an ultimatum to leave.
The flare-up came less than a month after Russia completed its annexation of Ukraine’s southern Crimea peninsula. Ukraine is a significant exporter of wheat and the world’s No. 3 corn supplier.
“If tensions between Ukraine and Russia intensify further, this could have a negative impact on wheat shipments from the Black Sea region, which would then increase demand from other exporting countries,” Commerzbank said in a note.
It added, however, that most of the exports out of the region, one of the world’s largest exporters of corn and wheat, have already been processed.
Corn, soy climb
Corn followed wheat higher, while reminders of strong export demand added support. The USDA reported export inspections of U.S. corn in the latest week at 1.449 million tonnes, above a range of trade estimates.
Cold temperatures in the U.S. Midwest early this week following weekend rains will slow corn planting, but drier conditions are forecast for next week.
After the close, USDA said U.S. corn planting was three per cent complete, behind the five-year average of six per cent.
The figure fell within a range of analyst estimates for one to five per cent.
Soybean futures were firm but worries about buyers in China, the top global soy consumer, defaulting on purchases hung over the market.
Gains in new-crop contracts were limited by expectations that potential U.S. corn planting delays might prompt farmers to switch some fields intended for corn over to soybeans.
— Julie Ingwersen is a Reuters correspondent covering ag commodity markets from Chicago. Additional reporting for Reuters by Sybille de La Hamaide and Colin Packham.