Wheat Climbs on U.S. Freeze Concern and Signs of Import Demand

January 23rd, 2014

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Category: Grains, Oilseeds

(Bloomberg) – Wheat rose for the first time in four sessions on concern that freezing weather in parts of the U.S. may harm crops and as purchases by Algeria and Iraq signaled a recent drop in prices is boosting import demand.

Temperatures in the Midwest are forecast to remain below zero degrees Fahrenheit (minus 18 degrees Celsius) in the next 10 days, with 15 percent of wheat in the region at risk of winterkill due to limited snow cover, Commodity Weather Group wrote in a report yesterday. It could be cold enough to damage wheat in the eastern Midwest, DTN said.

“Low temperatures recorded in the U.S. are raising concerns about the Midwest and Illinois wheats, prompting operators to show caution and cover some short positions,” Paris-based farm adviser Agritel wrote in a comment today.

March-delivery wheat rose 0.7 percent to $5.6525 a bushel on the Chicago Board of Trade by 4:36 a.m. Prices fell to $5.605 on Jan. 10, the lowest since July 2010, after the U.S. Department of Agriculture forecast record world output. Milling wheat for March delivery traded on NYSE Liffe in Paris added 0.5 percent to 194 euros ($264.48) a metric ton.

Algeria agreed to buy 500,000 tons of wheat for delivery in April and May, U.K. grain trader Gleadell Agriculture Ltd. reported. Iraq agreed to buy 200,000 tons of Australian wheat, 100,000 tons of Canadian wheat and 50,000 tons of U.S. wheat, the country’s grain board said.

“The low level of current prices is arousing buying interest,” Agritel wrote. “The markets seem to have found a short-term bottom.”

Some spillover of subzero temperatures into the southern U.S. Plains may happen in the six-to-10 day period, according to DTN. Parts of the Plains, including top winter-wheat grower Kansas, have no snow on the ground, National Weather Service data show.

Winterkill

“Freezing temperatures across the northern U.S. Plains and the upper Midwest are raising fears of winterkill,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, wrote in a note today. “This may provide some support to prices.”

Corn for March delivery gained 0.4 percent to $4.28 a bushel, advancing for a third day. Prices touched $4.0625 on Jan. 10, the lowest since August 2010. Soybeans for delivery in March rose 0.1 percent to $12.8075 a bushel.

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