Grain futures advance, wheat rebounds from 3-1/2-year low as frigid weather in the US seen hurting crops

Grain futures advanced on Thursday, wheat rebounded from 3-1/2-year low amid concern the cold US weather may result in winterkill and speculation demand for supplies from the largest exporter, US, rose.

On the Chicago Board of Trade, wheat futures for settlement in March added 0.82% to trade at $5.5613 per bushel by 13:45 GMT. Prices jumped to a session high of $5.5662 per bushel, while day’s bottom was touched at $5.5188. Yesterday prices touched $5.5075 per bushel, the weakest since July 14th 2010. Last week, the grain settled 0.6% higher, snapping seven weeks of declines, the longest losing streak since October 2008.

Wheat slumped 22% last year, marking the largest annual decline since 2008, on expectations for a record global output of 712.7 million tons, according to data by the US Department of Agriculture.

Wheat prices were supported as investors were concerned the frigid US weather may have damaged the crop and amid expectations the USDA will report an increase in the US exports from a year earlier.

According to a report by Commodity Weather Group LLC., cited by Bloomberg, as much as 10 percent of wheat in the Great Plains and 2 percent in the southern Midwest may be hurt after some protective snow cover melted last week.

A Bloomberg survey of 4 analysts forecast US export sales to be in a range of 300 000 metric tons to 625 000 tons in the week ended January 23rd from 293 627 tons a year earlier. The US Department of Agriculture is scheduled to release its shipments report later today.

DTN’s January 29th forecast called for some moderation in the recent harsh cold wave over the Midwest after another subzero event was noted in the soft red winter wheat belt early this week. According to the website, the snow cover will likely insulate the crop from the frigid temperatures, but some areas with less snow may be at risk.

Meanwhile, DTN reported that no significant cold threat is indicated over the Southern Plains in the next 10 days. However, there may be increasing snow and rainfall threats for the southern growing areas during this period.

Elsewhere on the grains market, soybeans futures for settlement in March traded little changed at $12.6912 per bushel by 13:45 GMT, adding 0.02% for the day. Prices touched a session high at $12.7350 per bushel, while day’s low stood at $12.6262 per bushel. The oilseed settled last week 2.3% lower.

Corn up as well

On the Chicago Board of Trade, corn futures for March delivery rose by 0.61% to trade at $4.3063 a bushel by 13:45 GMT. Futures held in a range between day’s high and low of $4.3088 and $4.2738 per bushel. On January 10th prices touched $4.0638 per bushel, the lowest since August 2010.

The grain settled last week 1.05% higher after it lost nearly 40% in 2013, the steepest annual drop on record amid expectations the global output will surge to 964.3 million tons in 2013-2014 season, boosted by record production in the US, the world’s top producer.

DTN reported on January 29th that Brazils northern crop areas will experience drier and warmer conditions over the next seven days, which will favor harvest progress. The drier trend will also cover southern Brazil, but stress to crops will be eased as next week above-normal rainfall is expected.

In Argentina’s main corn and soybeans areas, significant rainfall last week followed by lower temperatures eased some stress on developing and pollinating corn and developing soybeans. However, the earlier period of very hot and dry weather probably damaged some of the corn crop, as it was in pollinating phase.

Scattered to widely scattered thundershowers have been reported in key corn areas of South Africa during the weekend, with no significant hot weather expected. According to DTN, conditions will be mostly favorable for reproductive to filing corn during the observed period.