June 15, 2010

 

US wheat futures rally on wet weather

 

 

US wheat futures surged more than 3% on Monday, supported by detrimental wet weather in the US and Canada that delayed planting of spring wheat crops and slowed harvesting of US winter wheat.

 

CBOT soy and corn futures also posted gains as greater confidence about the global economy lifted oil and equities prices, which underpinned the grains complex along with a weaker dollar.

 

Minneapolis Grain Exchange July spring wheat futures led wheat prices higher, surging 21-1/2 cents, or 4.3%, to close at US$5.23-1/4. The gain in the nearby contract was the biggest percentage gain since December 2009.

 

Kansas City Board of Trade nearby winter wheat futures ended up 12-1/2 cents, or 2.3%, at US$4.79-1/2, while CBOT July wheat ended up 10-3/4, or 2.4%, at US$4.51-1/2. CBOT wheat saw the biggest percentage jump since April.

 

With the market focused on weather as harvesting of winter crops begins and the sowing of spring wheat, the rain delays, which could also harm the quality of the new winter wheat crop, encouraged bargain hunting, traders said.

 

Record rainfall in Canada has triggered an official forecast of the biggest unplanted area in nearly 40 years, and wet weather in the US Plains was raising concerns about harvesting there.

 

Ripening wheat was reported standing in water and it was expected to be several days, if not longer, before combine crews would be able to enter some fields in Kansas, the No. 1 US wheat-growing state.

 

The wet conditions could increase the risk of disease and lower quality.

 

Wet conditions due to excessive rains also threatened the final stage of soy planting in the US Midwest, helping support that market. Additionally, NOPA crush numbers were lighter than expected at 127.8 million bushels, below trade estimates.

 

CBOT corn prices got a boost Monday from fresh news of China demand for US corn. CBOT July corn closed up 4-1/4 cents at US$3.53-3/4 after the USDA confirmed that China bought 120,000 tonnes of US corn for 2009-10 delivery within the last business day.

 

Chinese demand for US corn and growing ethanol use helped underpin corn prices as some analysts forecast front-month CBOT corn at US$4.05 and wheat at US$5.25 in the fourth quarter.

 

US export inspections of corn tallied 27 million bushels, below trade expectations for 35 million to 39 million bushels, but corn prices were helped by a weaker dollar, which makes dollar-priced commodities cheaper.

 

Likewise, CBOT soy got a boost from the lower dollar, as well as stronger crude oil values. Weekly export inspections of US soy totalled 7.4 million bushels, up more than 2 million bushels from the previous week but within trade estimates for 5 million to 9 million bushels. July soy futures closed up 5-1/4 cents at US$9.51-1/2.

 

Traders noted front-month July beans gained ground to new-crop November as bull spreads unwind.