Wheat Rebounds as Slump May Spur Demand Amid Weather Concerns

February 27th, 2014

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Category: Grains, Oilseeds

(Bloomberg) – Wheat rebounded from the largest decline in almost a month as adverse global weather from the U.S. to Ukraine threatened global crops, putting the grain on course for the biggest monthly advance since July 2012.

The contract for May delivery rose as much as 0.3 percent to $6.07 bushel on the Chicago Board of Trade and was at $6.0575 by 12:32 p.m. in Singapore after a 2 percent plunge yesterday, the most since Jan. 29. Futures are poised to climb 9 percent this month after slumping 8.2 percent in January and 9.5 percent in December.

Extreme cold temperatures are forecast for the U.S. Midwest, with soft-red winter wheat somewhat at risk after the recent warm spell melted protective snow cover, DTN said yesterday. While showers in southern Ukraine over the next few days will improve moisture slightly, much more will be needed across nearly all of the country and southern Belarus before spring to replenish moisture, MDA Information Systems LLC. said yesterday. The U.S. is the world’s largest exporter.

Wheat “had a reasonably substantial fall off in January so there’s a little bit of buying at the base,” said Michael Pitts, commodity sales director at National Australia Bank Ltd. in Sydney. “We’ve also seen the weather situation deteriorate a little bit. Not fantastically, but enough that there’s been enough reports on it to bring some buyers out and probably had the sellers a bit unable to pull the trigger.”

About 44 percent of Texas winter wheat was in poor or very-poor condition as of Feb. 16, up from 41 percent on Feb. 9, the Texas Department of Agriculture said Feb. 18. The net-bearish position in wheat shrank to 34,402 contracts in the week ended Feb. 18 from 43,225 a week earlier, U.S. Commodity Futures Trading Commission data show.

Corn for May delivery declined 0.5 percent to $4.5875 a bushel after touching $4.65 yesterday, the highest level for a most-active contract since Sept. 17. Soybeans traded at $13.9675 a bushel from $13.97 yesterday, when prices climbed to $13.9775, the highest since Sept. 13.

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