July 16, 2010

 

US wheat futures hits 13-month highs

 

 

The bullish run in wheat showed no signs of slowing on Thursday (July 15) as the market hit 13-month peaks to once again lead commodities higher, after worries about crop-debilitating weather across Europe.

 

Soy and corn were other sharp gainers in the session, helping the 19-commodity Reuters-Jefferies CRB index settle up a third straight day.

 

US wheat soared almost 7% to its highest price since June 2009 as investors worried about the fate of crops in countries such as Russia, France and Germany - all facing hot, dry summer weather.

 

US wheat's front-month contract hit a 13-month peak of US$5.98-1/2 a bushel before finishing at US$5.56-1/4, up 37-1/4 cents, or 6.7%. Since June, front-month wheat has risen over 28%.

 

French analyst Strategie Grains cut its estimate for the EU's 2010 soft wheat crop to 129.5 million tonnes, down 3.6 million tonnes from last month.

 

In the US, the National Weather Service predicted above-normal temperatures for most of the continental US for August through October, except for the Great Plains. It noted the possibility of a La Nina weather pattern that could contribute to hotter, drier weather in the Midwest by late summer, but said the largest potential impact from La Nina was likely to come in winter, after the US harvest.

 

The jitters over weather also helped corn and soy to shrug off pressure from weak outside markets such as oil.

 

Soy futures' front-month contract in Chicago settled up 2.2%, or 21-1/2 cents, at US$10.19 per bushel buoyed in part by export demand from top soy consumer China.

 

The USDA said in a weekly report that China bought 234,000 tonnes of old-crop US soy and 226,000 tonnes of new-crop soy in the latest week.

 

Separately, USDA on Thursday confirmed sales of an additional 116,000 tonnes of new-crop soy to China, along with 238,000 tonnes sold to an unknown destination. US soy sales for the week totalled 1.225 million tonnes, the biggest tally in nearly seven months.

 

Corn futures' front-month contract in Chicago settled up 2.2%, or 8-1/4 cents, at US$3.92-1/2 per bushel, after weekly US corn sales were the highest in three weeks at 1.023 million tonnes.

 

China, which this summer bought US corn for the first time in four years, purchased 125,200 tonnes.