July 16, 2010

CBOT wheat futures jump most in 19 months

CBOT wheat futures on Thursday (July 15) soared the most in 19 months, as the hot, dry spell in Russia may reduce grain output.

Corn and soy futures rallied on the speculation that the lingering heat wave in US Midwest would increase the risk to crops.

September wheat futures surged 37.25 cents, or 6.7%, to US$5.9625 per bushel, the largest increase since November 24, 2008. December corn futures climbed 9 cents, or 2.3%, to US$4.0525 per bushel, the price reached US$4.10 per bushel, the highest level for a most-active contract since January 12. November soy futures rose 26.0 cents, or 2.7%, to US$9.88 per bushel, the price reached US$9.8975 per bushel, the highest level since May 5.

USDA said Thursday (July 15) that the net export sales for corn last week totalled 1,023,400 tonnes, and the net export sale for wheat reached 309,400 tonnes, which is on the soft side. But the net export sale for soy last week has surged to 1,225,000 tonnes, which is much higher than analysts' expectation.

"Wheat right now is up over US$1.50 since that quarterly grain report we had in the end of June, which is quite a move we had in a measure of couple of weeks. Wheat is moving on big supply problems," said Frank Lesh with Futurepath.

"Forecasts for wheat production around the world have really taken a hit. Canada started this about two to three weeks ago, of course there has been excessive moisture in Canada, too much precipitation there. Not the case in the Europe and Russia, we're going through one of the worst heat waves and droughts they had in many years. Situation there gets direr by the moment," according to Frank Lesh.

"Corn and soy got a really good demand situation. Soy exports reached seven months high. Corn exports had a three-week high, up 24% over last week. And this year alone, China has bought 1.1 million tonnes of corn, that is a 15 years high for Chinese imports," said Frank Lesh.

"There's talk about the possibility of 10-15 days of hot and dry weather coming into the Midwest. We'll keep an eye on that, and we have put in the weather premium right now," Lesh added.