Grain futures advance, wheat threatened by US record-low temperatures

Grains advanced on Tuesday, with wheat advancing on potentially harmful low US temperatures, which have not been seen in decades. Corn and soybeans also advanced.

On the Chicago Board of Trade, wheat futures for settlement in March rose by 0.28% to trade at $6.0813 per bushel by 15:32 GMT. Prices jumped to a session high of $6.0862, while day’s bottom was touched at $6.0238 per bushel. On January 2nd, prices touched $5.9588 per bushel, the weakest since May 2012. The grain slumped 22% in 2013, the largest annual decline since 2008, on expectations for a record-high global output of 711.42 million metric tons, according to data by the USDA.

According to a Bloomberg survey of 18 analysts, US winter-wheat planting probably rose to 43.53 million acres, the highest level in six years. Farmers were prompted to expand the grain planting because of the high-crop insurance guarantees and the improved soil moisture.
The coldest air in almost 20 years is sweeping over the central U.S. toward the East Coast, threatening to topple temperature records and ignite energy demand.

The grain was supported by weather forecasting models, which called for potentially harmful cold temperatures. DTNs January 6th forecast called for episodes of extreme cold conditions, with snow in south and east areas during the week. The well-established winter wheat in the southern Plains may be endangered by an Arctic cold air, which has the potential to bring subzero cold weather. Temperatures may reach as low as minus 10 degrees Fahrenheit, especially over northeast areas.

“As much as 15 percent of winter-wheat plants in the Great Plains face damage”, Kyle Tapley, a senior agricultural meteorologist at MDA Weather Services in Gaithersburg, Maryland, said in an interview, cited by Bloomberg.

Elsewhere on the grains market, soybeans futures for settlement in March added 0.13% to trade at $12.7788 per bushel by 15:38 GMT. Prices swung between day’s high and low of $12.7812 and $12.6612 per bushel respectively. On January 2nd prices touched $12.6262 per bushel, the lowest since November 8th. The oilseed settled the year 8.5% lower.

Corn up as well

Corn futures for March delivery traded at $4.2988 a bushel by 15:40 GMT, advancing 0.58% for the day. Futures held in a range between day’s high and low of $4.2988 and $4.2638 per bushel. On January 3rd prices bottomed at $4.1712 per bushel, the lowest since November 21st. The grain lost nearly 40% in 2013, the steepest annual drop on record, on projections that the global output will surge to 964.3 million tons in the 2013-2014 season, boosted by record production in the US, the world’s top producer.

Prices were supported by favorable weather conditions. DTN reported on January 6th that episodes of showers and thundershowers in Brazil, accompanied by hot weather will favor developing corn and soybeans, along with early harvest in northern Mato Grosso. However, the hot weather trend for Argentina continues to be unfavorable for the corn and soybeans producing regions, by drying the soil moisture. Last month, La Pampa and Buenos Aires regions experienced very hot weather conditions with little rainfall. The next rainfall is expected in the middle of this week to finally bring favorable rains to the key corn and soybeans areas.