(Reuters) – Wheat futures on the Chicago Board of Trade climbed to the highest level in almost two weeks on Monday as the coldest weather in two decades threatened to damage prospects of crops in the United States.
Corn and soybean prices also edged higher.
“It is as yet unclear how severely the still dormant wheat plants will be damaged by the extreme cold weather in the U.S. In some areas, the lowest temperatures for 20 years are forecast for this week,” Commerzbank said in a market note.
“Especially in the southern Great Plains and the Midwest, plants could suffer because there is not sufficient snow cover everywhere to protect them.”
Chicago Board of Trade March wheat rose 0.3 percent to $6.07-1/2 a bushel by 1120 GMT, just below the session peak of $6.10-1/2 a bushel, the highest since Dec. 24.
Bitter cold temperatures across the U.S. Plains this week will put some of the dormant hard red winter wheat crop at risk of damage, particularly in drier areas of the region.
Temperatures on Monday were expected to hit lows of 5 to 15 degrees below zero Fahrenheit (minus 20.6 to minus 26.1 Celsius) in parts of Kansas and Nebraska, cold enough to destroy some crops through winterkill.
“It’s not going to be long-lived,” said Bob Oravec, a National Weather Service meteorologist. “By the end of the week, the temperatures definitely start to moderate across the whole of the country.”
Wheat futures in Paris were also higher, with March up 0.5 percent at 203.25 euros ($280) a tonne.
Dealers said prices in Paris were supported by strong export demand.
“In several instances, (European Union) export licences for more than 800 thousand tonnes were issued in a single week. Even recently, there have been reports of big orders from Egypt and Algeria,” Commerzbank said.
CORN RISES
Chicago corn futures edged up, tracking gains in wheat. They have been under pressure from rising global supplies and China’s cancellation of U.S. cargoes.
March corn gained 0.4 percent to $4.25-1/4 a bushel.
China has rejected numerous cargoes of U.S. corn since mid-November because they contained Syngenta AG’s MIR 162 corn, a genetically modified variety not approved for imports by China.
“The U.S. is now attempting to sell corn that it has already shipped to the region to other countries such as South Korea,” Commerzbank said.
CBOT March soybeans rose 0.04 percent to $12.71-3/4 a bushel.
The U.S. Department of Agriculture will release its final production forecast for the 2013/14 marketing season on Jan. 10, and many analysts expect it to raise estimates of crop sizes.
Informa Economics boosted yield estimates for both the U.S. corn and soybean crops but reduced its estimate for the corn crop in Brazil.
Corn and soybeans are facing additional pressure from prospects of higher production in South America.
“Seasonal conditions in South America continue to point to very, very large crops there,” said Luke Mathews, commodities strategist at Commonwealth Bank of Australia. ($1 = 0.7346 euros)
