Chicago | Reuters — U.S. wheat futures jumped nearly two percent on Monday as scorching temperatures in the southern Plains deepened fears about weather damage to the U.S. hard red winter wheat crop.
The gains in wheat helped lift corn after heavy losses last week, but soybeans fell on talk of U.S. soy imports from South America and record-high Canadian stocks of canola, a competing oilseed.
At the Chicago Board of Trade, most-active July wheat settled up 13 cents at $7.29 per bushel, after trading as high as $7.40-1/2 (all figures US$). Kansas City July hard red winter wheat ended up 10-1/4 cents at $8.32 after touching $8.43, its highest level since December 2012.
July corn ended up 8-1/2 cents at $5.08 a bushel while July soybeans finished down 7-1/2 cents at $14.63-1/4 a bushel.
Wheat advanced after weekend temperatures in parts of Kansas, the top U.S. wheat state, topped 100 F (38 C), coupled with high winds. Crops there were already reeling after months of drought.
“The crop came into this heat already stressed from cold weather and stressed from an ongoing drought,” said Sterling Smith, a futures specialist with Citigroup in Chicago.
“The issues with the heat were exacerbated by high winds, and there were reports of poorly developed crops being blown away in parts of eastern Colorado,” Smith said.
An annual crop tour of Kansas on Thursday estimated the poorest production prospects in more than a decade, while Informa Economics slashed its U.S. winter wheat crop estimate by 120 million bushels, to 1.496 billion, in a client note on Friday.
After the CBOT close, the U.S. Department of Agriculture said 31 per cent of the U.S. winter wheat crop was rated in good to excellent condition, down two percentage points from the previous week and in line with trade expectations.
USDA is scheduled to publish its first 2014-15 supply-and-demand forecasts on Friday for both U.S. and world crops.
Rising tensions in Ukraine lent additional support to the grains complex. Ukraine’s interior minister said on Monday he had drafted a new special forces unit into the southern port city of Odessa after the “outrageous” failure of police to tackle pro-Russian separatists in a weekend of violence that killed dozens.
But market worry over the situation in Ukraine was tempered by the fact that trading and port activity appeared to be continuing normally, traders said.
Corn rises, soy retreats
Corn followed wheat higher, rebounding after a selloff last week briefly sent prices below psychological support at $5 a bushel.
Additional support stemmed from reminders of strong export demand. USDA reported export inspections of U.S. corn in the latest week at 1.239 million tonnes, within a range of trade estimates.
Traders also noted concern about a slow start to planting in the U.S., the world’s top supplier. After the close, USDA reported 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.
“The trade was a little bit surprised that the (projected) planting progress was not higher, given how much producers are starting to move forward,” said Mike Zuzolo, president of Global Commodities Analytics in Atchison, Kansas.
Soybeans turned down after Statistics Canada reported March 31 stocks of canola, a competing oilseed, at a record-high 9.02 million tonnes. [Related story]
Also bearish, the USDA pegged export inspections of U.S. soybeans in the latest week at 99,502 tonnes, below a range of trade estimates for 100,000 to 200,000 tonnes.
Talk of South American soy cargoes being imported into the U.S. added pressure.
“Guys in Chicago are saying there are upwards of 12 cargoes of South American beans headed this way, with another two to four cargoes being pencilled in as well,” Zuzolo said.
USDA after the close said the U.S. soybean crop was five per cent planted, behind the five-year average of 11 per cent and below an average of analyst estimates of eight per cent.
— Julie Ingwersen is a Reuters correspondent covering crop futures markets for Reuters from Chicago. Additional reporting for Reuters by Gus Trompiz in Paris and Colin Packham in Sydney.