Grain futures advance, wheat touches two-week highs

Grain futures advanced on Monday, with wheat touching two-week highs as weather forecasting models showed possible damage on the US crops, the worlds largest wheat exporter. Corn and soybeans also advanced.

On the Chicago Board of Trade, wheat futures for settlement in March rose by 0.61% to trade at $6.0988 per bushel by 15:39 GMT. Prices jumped to a session high of $6.1238, the strongest level since December 23rd, while day’s bottom was touched at $6.0712 per bushel. On January 2nd, prices touched $5.9588 per bushel, the weakest since May 2012. The grain slumped 22% in 2013, the largest annual decline since 2008, on expectations for a record-high global output of 711.42 million metric tons, according to data by the USDA.

According to DTNs January 3rd forecast, a new storm is expected in the Midwest. The website weather forecast called for episodes of extreme cold conditions, with snow in south and east areas during the week. The well-established winter wheat in the southern Plains may be endangered by an Arctic cold air, which has the potential to bring subzero cold weather. Temperatures may reach as low as minus 10 degrees Fahrenheit, especially over northeast areas.

“It is as yet unclear how severely the still-dormant wheat plants will be damaged by the extreme cold weather in the US. In the southern Great Plains and the Midwest, plants could suffer because there is not sufficient snow cover everywhere to protect them.” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, wrote in report today, cited by Bloomberg.

According to a Bloomberg survey of 18 analysts, US winter-wheat planting probably rose to 43.53 million acres, the highest level in six years. Farmers were prompted to expand the grain planting because of the high-crop insurance guarantees and the improved soil moisture.

Elsewhere on the grains market, soybeans futures for settlement in March traded at $12.7563 per bushel at 15:41 GMT, adding 0.32% on a daily basis. Prices swung between day’s high and low of $12.8200 and $12.6962 per bushel respectively. On January 2nd prices touched $12.6262 per bushel, the lowest since November 8th. The oilseed settled the year 8.5% lower.

Corn up as well

Corn futures for March delivery traded at $4.2588 a bushel by 15:41 GMT, advancing 0.58% for the day. Futures held in a range between day’s high and low of $4.2788 and $4.2388 per bushel. On January 3rd prices bottomed at $4.1712 per bushel, the lowest since November 21st. The grain lost nearly 40% in 2013, the steepest annual drop on record, on projections that the global output will surge to 964.3 million tons in the 2013-2014 season, boosted by record production in the US, the world’s top producer.

Prices were supported by favorable weather conditions. DTN reported on January 3rd that increasing showers and thundershowers in Brazil at the end of this week will maintain favorable growing conditions for the developing soybeans and corn crops. Meanwhile, scattered thunderstorms followed by lower temperatures this week will temporarily ease concerns for corn and soybeans in Argentina. However, temperatures will increase rapidly again this weekend and early next week, before the next next chance of scattered showers.