Chicago | Reuters — Chicago Board of Trade wheat futures rose nearly four per cent on Tuesday, their biggest single-day advance in 10 months, as declining crop conditions in the southern U.S. Plains triggered technical buying and short covering, traders said.
Soybeans rose back above $13 a bushel for the first time in two weeks, lifted by strong export demand for U.S. soymeal, and corn firmed on chart-based buying and recent export demand (all figures US$).
At the CBOT, March wheat settled up 20-3/4 cents at $5.84-1/2 per bushel.
Kansas City hard red winter wheat futures led the gains, with the KCBT March contract ending up 22-1/4 cents at $6.46-1/2 a bushel, its highest close since Christmas Eve.
The surge followed monthly state crop reports, issued late Monday by the U.S. Department of Agriculture, that showed a drop in wheat condition ratings in major hard red winter wheat states including Kansas, Oklahoma and Texas.
Crops in that region endured dry conditions and bouts of extreme cold during January. Nearly half of Kansas, the biggest U.S. wheat producer, is under a severe drought, according to the latest weekly report from the U.S. Drought Monitor, produced by a consortium of climatologists.
USDA said 35 per cent of winter wheat in Kansas was rated good to excellent, down from 58 per cent at the end of December. The amount rated poor to very poor jumped to 20 per cent, from six per cent a month earlier.
“The winter wheat ratings in general draw attention to what the persistent dryness has done,” said Dan Cekander, analyst with Newedge USA in Chicago.
A winter storm is expected to bring as much as 10 inches of snow to the central Plains through Wednesday, which will help insulate the crop from frigid temperatures to follow. But the crop will need more moisture as it emerges from dormancy later this year.
Also bullish for prices, Statistics Canada reported Dec. 31 Canadian all-wheat stocks at 28.381 million tonnes, a 20-year high that nonetheless fell below an average trade estimate of 28.9 million.
Soybeans back above $13
CBOT March soybeans settled up 20-1/2 cents at $13.13-1/4 a bushel, rising back above the $13 mark for the first time in two weeks as front-month March soymeal surpassed its life-of-contract high of $440.40 per short ton.
Soymeal advanced on firm cash markets and strong export demand for U.S. soymeal as output slowed from Argentina, the world’s top soymeal supplier. Farmers in Argentina have been hoarding their soybeans, which are priced in U.S. dollars, as a hedge against inflation.
“The meal is the horse that is pulling the wagon for the soy complex,” said Sterling Smith, a futures specialist with Citigroup in Chicago. “We are seeing stout export demand pointed at the U.S. Some is stemming from situation in Argentina, where farmers are unwilling to sell their beans.”
Also, winter storms and frigid temperatures in the U.S. Midwest have slowed the movement of soybeans and soy products in some areas.
Soybeans drew additional support from worries about dryness in Brazil. The harvest of a likely record Brazilian soybean crop is under way but crops are still developing in some areas.
Technical buying in corn
CBOT March corn ended up six cents at $4.41-3/4 per bushel, topping the contract’s 100-day moving average near $4.40 — a bullish signal for chart-watchers who have watched the contract languish below that price for most of the last three months.
“A move above $4.40 would signal that… we might be staring at the opportunity to go back towards $4.50,” said Mike North of First Capitol Ag in Platteville, Wisconsin.
The market got a technical boost on Monday as March corn surpassed its mid-January high of $4.35-1/2 on good export demand and short covering.
The trade also was looking ahead to the USDA’s next monthly supply/demand reports due Feb. 10, in which the government will update its forecasts of U.S. and world ending stocks of corn, soy and other crops.
“The expectation is that you could have a lowering of both U.S. corn and soybean carryout,” Cekander said.
— Julie Ingwersen is a Reuters correspondent covering ag commodity markets from Chicago. Additional reporting for Reuters by Sybille de La Hamaide in Paris and Naveen Mutnal in Singapore.