US wheat extends rally as temperatures plunge

imageCHICAGO: US wheat futures rose for the second day in a row on Tuesday on support from the deteriorating condition of the dormant crop and prospects for more damage from Arctic temperatures across key growing areas, traders said.

“The hard red winter wheat crop is in a tough spot right now,” Matt Zeller, director of market information for INTL FCStone, said in a note to clients.

Soybean futures also rose, buoyed by fresh export demand. Corn edged higher on technical buying.

K.C. hard red winter wheat posted the biggest gain, with the March contract rising 16-1/4 cents to $ 6.41 a bushel by 10:32 a.m. CST (1632 GMT). The most actively traded Chicago Board of Trade March soft red winter wheat contract was 13 cents higher at $ 6.02.

“Perhaps the cold did worry some punters out of their shorts,” Tobin Gorey, director of agriculture strategy for the Commonwealth Bank of Australia, said in a note to clients.

Winter wheat conditions deteriorated in several US states during December, particularly in Illinois, where the crop was affected by delays in planting, monthly state reports issued by the US Department of Agriculture showed on Monday.

INTL FCStone’s Zeller said recent export demand for US supplies despite high prices added strength to the rally.

China, which is said to have bought about 120,000 tonnes of hard wheat in past days, is likely to step up imports of higher-quality grains to meet a domestic shortfall, analysts and traders said.

CBOT March soybean futures were up 1-3/4 cents at $ 10.47 a bushel.

Private exporters reported the sale of 243,000 tonnes of US soybeans to China, including 123,000 tonnes for delivery in the current marketing year, the USDA said on Tuesday. The announcement follows news of another sale on Monday.

CBOT March corn was 1/2 cent higher at $ 4.06-1/2 a bushel, with traders noting support at the 20-day moving average.

Some concerns about dry conditions in parts of Brazil taking the top off what is expected to be a bumper harvest of both corn and soybeans added support to futures prices.

Copyright Reuters, 2014

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