U.S. grains: Wheat surges on worries about Plains dryness

Chicago | Reuters — Nearby Chicago wheat futures jumped three per cent on Wednesday and hit a four-month high on worries about dry conditions threatening yield prospects in the southern U.S. Plains, analysts said.

Corn futures rose on robust export demand for U.S. supplies while soybean futures declined after a choppy session.

Chicago Board of Trade March wheat settled up 14-1/4 cents at $4.60-1/2 per bushel after reaching $4.61-3/4, the highest spot price on a continuous chart since Sept. 28 (all figures US$).

K.C. hard red winter wheat futures led the way up. The K.C. March contract attracted chart-based buying after it pushed through its 200-day moving average for the first time since Aug. 10.

Hard red winter wheat, the largest U.S. wheat class, is grown in southern Plains states such as Kansas and Oklahoma, where rain has been scarce since October. While the 2018 crop is still in its winter dormancy, soil moisture is in tight supply and monthly crop ratings fell sharply in January.

“K.C. wheat is making the big trade, based on the southern Plains drought that is pretty serious. You’ve also changed the technical formation in the market (and) that has brought in another type of buyer,” said Terry Linn, analyst with Linn and Associates in Chicago.

Corn drew support from export demand. U.S. corn is the cheapest among major global suppliers, a factor that has bolstered sales in recent weeks. CBOT March corn ended up 1-3/4 cents at $3.65-1/4 a bushel.

Ahead of the U.S. Department of Agriculture’s weekly export sales report on Thursday, analysts expected the government to report U.S. corn sales at 1.3 million to 1.9 million tonnes.

U.S. farmers have been selling moderate amounts of old-crop corn this week, but not enough to push futures lower, traders said.

CBOT March soybeans ended down 3-1/4 cents at $9.83 a bushel after a seesaw session as traders squared positions ahead of a monthly supply/demand report due Thursday from USDA.

Analysts surveyed by Reuters on average expected USDA to raise its forecast of U.S. 2017-18 soybean ending stocks, reflecting a sluggish export pace.

Traders also weighed concerns about dry conditions in Argentina’s crop belt against forecasts for rains there in the coming days. News of a strike by Argentine truck owners lent support to soybean and soymeal futures.

But CBOT soyoil futures fell, in part due to uncertainty about whether U.S. lawmakers would include a $1/gallon tax credit for soy-based biodiesel in a massive budget deal.

— Julie Ingwersen is a commodities correspondent for Reuters in Chicago; additional reporting by Sybille de La Hamaide in Paris and Naveen Thukral in Singapore.

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