Storms push up wheat futures prices

May 1 was the kind of day that shows what happens when you spook shorts.

Speculators bailed on short winter wheat positions after heavy snow hit the United States southern plains over the weekend, driving winter wheat futures more than 20 cents per bushel higher, with Kansas City nearby futures rising 28 cents.

The snow doesn’t likely change much in terms of wheat’s glutted situation around the world, but it triggered caution.

“You’ve got a market that’s heavily short. They have luscious profits. They’re not going to hesitate to cash them and put the money in the bank,” said Ken Ball, a broker with P.I. Financial.

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That’s how Jon Driedger of FarmLink Marketing saw it too.

“Funds are basically record short coming into this,” said Driedger.

“You get some short-covering, push through some chart signals, you get some additional buying and so you get an additional sugar rush of short-covering.”

Minneapolis futures rose, but not nearly as much.

The snow hit parts of western Kansas, Nebraska and Oklahoma and was heavy, estimated at 20 to 35 centimetres deep. Some crops are believed to have suffered stem damage from the weight. It will take several days to determine how much damage has occurred and how readily crops can recover.

Frost damage is also said to have occurred, with temperatures below freezing for a few hours in some areas.

Fall-seeded canola was also hit by the snow and frost, with some crops in bloom.

Damage estimates will be sketchy for a while.

Corn futures rose 10-11 cents per bushel, gaining from the wheat rally and the speculation that the storm had hit the corn belt with enough moisture and cold to slightly challenge seeding progress and prospects for already planted crops.

However, Ball thought the rally was hard to justify on lasting fundamental factors, with the snow and frost probably not enough to seriously challenge most crops.

“Ultimately, it’s all precipitation,” said Ball.

“In the end, snow makes grain.”

Driedger said the rally could continue for a second or third day just on short-covering, and following the trend of the last week.

But it’s hard to view the May 1 dramatic action as the beginning of a bull move in wheat. Rather, it’s most likely to be part of a bounce against the continuing bear market in wheat.

“You’d really need some significant loss of yields and production, not just in the U.S. but elsewhere to turn this thing around,” said Driedger.

May canola, which is little traded and will expire soon, rallied $14.50 per tonne.

Most-traded July rose only 90 cents or 0.17 percent, falling behind the gains of soybeans and soybean oil futures, which both climbed more than one percent.

New crop canola climbed over the $500 level, closing at $501.20.

U.S. CROP PROGRESS

After the market closed the USDA weekly crop progress report said that as of Sunday, 34 percent of the corn crop was in the ground, Behind last year’s rapid pace of 43 percent but right in line with the five year average of 34 percent.

Soybean planting rose to 10 percent, which was better than last year’s pace of seven percent and the five year average of seven percent.

It kept the condition of the winter wheat crop unchanged. The impact of the snow and frost will show up in the following weeks.

Spring wheat planting was lagging at 31 percent complete, compared to 52 percent last year and the five year average of 46 percent.

OUTSIDE MARKETS

Light crude oil nearby futures in New York were down 49 cents to US$48.84 per barrel.

In the afternoon, the Canadian dollar was trading around US73.09 cents, down from 73.22 cents the previous trading day. The U.S. dollar was C$1.3682.

Winnipeg ICE Futures Canada dollars per tonne
Canola Jul 2017   515.60   +0.90   +0.17%
Canola Nov 2017   501.20   +1.80   +0.36%
Canola Jan 2018   505.80   +2.40   +0.48%
Canola Mar 2018   510.30   +2.60   +0.51%
Canola May 2018   512.30   +2.50   +0.49%

Milling Wheat Jul 2017   245.00   +4.00   +1.66%
Milling Wheat Oct 2017   242.00   +4.00   +1.68%
Milling Wheat Dec 2017   244.00   +3.00   +1.24%

Durum Wheat Jul 2017   272.00   unch   0.00%
Durum Wheat Oct 2017   264.00   unch   0.00%

Durum Wheat Dec 2017   264.00   unch   0.00%

Barley Jul 2017   138.00   unch   0.00%
Barley Oct 2017   140.00   unch   0.00%
Barley Dec 2017   140.00   unch   0.00%

American crop prices in cents US/bushel, soybean meal in $US/short ton, soy oil in cents US/pound

Chicago
Soybeans May 2017   959.00   +14.75   +1.56%
Soybeans Jul 2017   970.25   +14.75   +1.54%
Soybeans Aug 2017   971.50   +14.75   +1.54%
Soybeans Sep 2017   967.00   +13.50   +1.42%
Soybeans Nov 2017   964.50   +12.00   +1.26%
Soybeans Jan 2018   971.25   +12.25   +1.28%

Soybean Meal May 2017   314.30   +2.90   +0.93%
Soybean Meal Jul 2017   318.60   +3.40   +1.08%
Soybean Meal Aug 2017   319.50   +3.20   +1.01%

Soybean Oil May 2017   31.89   +0.45   +1.43%
Soybean Oil Jul 2017   32.16   +0.44   +1.39%
Soybean Oil Aug 2017   32.27   +0.45   +1.41%

Corn May 2017   369.25   +11.50   +3.21%
Corn Jul 2017   377.50   +12.00   +3.28%
Corn Sep 2017   384.75   +11.25   +3.01%
Corn Dec 2017   394.50   +10.75   +2.80%
Corn Mar 2018   404.00   +10.00   +2.54%

Oats May 2017   243.25   +4.25   +1.78%
Oats Jul 2017   239.50   +11.75   +5.16%
Oats Sep 2017   231.75   +6.75   +3.00%
Oats Dec 2017   223.50   +3.75   +1.71%
Oats Mar 2018   225.00   -0.75   -0.33%

Wheat May 2017   442.75   +24.25   +5.79%
Wheat Jul 2017   456.00   +24.25   +5.62%
Wheat Sep 2017   468.75   +23.50   +5.28%
Wheat Dec 2017   490.00   +22.25   +4.76%
Wheat Mar 2018   507.00   +20.50   +4.21%

Minneapolis
Spring Wheat May 2017   549.75   +9.75   +1.81%
Spring Wheat Jul 2017   562.75   +8.75   +1.58%
Spring Wheat Sep 2017   567.50   +7.25   +1.29%
Spring Wheat Dec 2017   573.25   +5.75   +1.01%
Spring Wheat Mar 2018   580.50   +6.00   +1.04%

Kansas City

Hard Red Wheat May 2017   452.75   +28.25   +6.65%
Hard Red Wheat Jul 2017   465.75   +29.00   +6.64%
Hard Red Wheat Sep 2017   479.50   +27.25   +6.03%
Hard Red Wheat Dec 2017   501.50   +26.00   +5.47%
Hard Red Wheat Mar 2018   514.25   +24.25   +4.95%

Chicago livestock futures in US¢/pound (rounded to two decimal places)
Live Cattle (P) Jun 2017   124.12   +0.04   +0.03%
Live Cattle (P) Aug 2017   120.18   +0.30   +0.25%
Live Cattle (P) Oct 2017   117.90   unch   0.00%

Feeder Cattle (P) May 2017   148.60   +0.12   +0.08%
Feeder Cattle (P) Aug 2017   153.75   +0.17   +0.11%
Feeder Cattle (P) Sep 2017   153.68   +0.10   +0.07%

Lean Hogs (P) May 2017   66.12   -0.80   -1.20%
Lean Hogs (P) Jun 2017   73.28   -0.70   -0.95%
Lean Hogs (P) Jul 2017   74.88   -0.34   -0.45%