Chicago | Reuters — U.S. wheat futures climbed to a one-week high on Tuesday, rising more than three per cent on fears that frigid temperatures in the bread basket of the U.S. Plains may have damaged winter wheat, analysts said.
Corn and soybean futures followed the firm trend, with a strong U.S. soy-crushing pace and worries about harvest delays in Brazil lending support.
Chicago Board of Trade March wheat futures settled up 20-3/4 cents at $6.57-1/2 per bushel after reaching $6.60-1/4, the contract’s highest level since Feb. 9 (all figures US$).
CBOT March corn ended up 13-1/2 cents at $5.52-1/4 a bushel and March soybeans settled up 12-3/4 cents at $13.84-3/4 a bushel.
Wheat surged as traders focused on temperatures dropping below 0 F as far south as Texas. In Goodland, Kansas, a reading of -24 F (-31 C) on Tuesday shattered a record set in 2007 of -13 F (-25 C). Winter wheat was seen as vulnerable to the extreme cold in areas lacking adequate snow cover.
“We won’t know the level of losses from this outbreak for several weeks… but (30 per cent) of the U.S. hard red winter wheat was vulnerable to significant freeze damage over the weekend,” Arlan Suderman, chief commodities economist for StoneX, said in a client note.
Hard red winter wheat is the largest U.S. wheat class and Kansas is the top producer. The extreme conditions likely stressed the region’s cattle herd as well, Suderman noted.
The market shrugged off reminders of a bumper Australian wheat crop. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) raised its forecast of the country’s 2020-21 harvest to a record-high 33.34 million tonnes, from its December estimate of 31.17 million.
CBOT soybean futures drew support from a larger-than-expected monthly soy-crushing figure from the National Oilseed Processors Association, which said its U.S. members crushed 184.654 million bushels of soybeans in January.
The tally was the second-largest for any month and topped an average of analyst estimates for 183.1 million bushels.
“NOPA supported the market. We rallied a little bit off that,” said Jack Scoville, analyst with the Price Futures Group in Chicago.
Brisk demand for U.S. soybeans has eroded stockpiles and the slow arrival of Brazil’s new crop has fuelled supply concerns.
— Reporting for Reuters by Julie Ingwersen in Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.