CHICAGO, Jan 6 (Reuters) – U.S. wheat futures approached a two-week high on Monday as the coldest weather in two decades threatened to damage dormant crops in the United States.
Corn and soybean futures edged higher amid technical buying ahead of a key U.S. Department of Agriculture (USDA) crop report on Friday and on expectations the brutal cold will increase demand for livestock feed, traders said.
Near-record low temperatures in the U.S. Midwest and Plains raised the risk of damage to the dormant U.S. wheat crop and threatened to stall the movement of grain to markets, MDA Weather Services forecaster Don Keeney said.
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An arctic blast that swept across the heartland pushed morning lows to -4 to -10 degrees Fahrenheit (-20 to -23 Celsius) in the top wheat state of Kansas, while Nebraska and Colorado had morning lows in the -12 to -20 F range, he said.
Cold weather can boost demand for livestock feed because animals eat more to generate energy to keep warm.
“The market is concerned with the bitterly cold temperatures,” said Brian Hoops, president of Midwest Market Solutions. “Feed demand is expected to improve.”
Chicago Board of Trade March wheat rose 5-1/4 cents to $6.11 a bushel by 9:45 CST (1545 GMT), just below the session peak of $6.12-3/4, the highest since Dec. 23. Kansas City Board of Trade March wheat jumped 6-1/4 cents to $6.48-3/4 a bushel.
March corn gained 3-1/4 cents to $4.26-3/4 a bushel, while March soybeans rose 6-3/4 cents to $12.78 a bushel.
CORN REBOUNDS
Corn futures rose after front-month March corn fell to a contract low Friday. The market had been under pressure from rising global supplies and the cancellation of U.S. corn purchases by China.
A report on Monday by the official Xinhua news agency suggested that more U.S. corn cargoes than previously thought had been turned away by China since Dec. 20, traders said.
The report said China had rejected 601,000 tonnes of corn and corn by-products from the U.S. by the end of last year, while when 545,000 tonnes of the grain had been refused by the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ).
“Some had expected Chinese imports to outpace USDA projections this year, however it now looks as if the opposite scenario is playing out,” said Joseph Vaclavik, president of Standard Grain.
Still, private exporters reported the sale of 110,600 tonnes of U.S. corn to Mexico for delivery in the marketing year that started on Sept. 1, the USDA said.
Exporters sold 160,000 tonnes of U.S. wheat to unknown destinations for the marketing year that begins on June 1.
SOUTH AMERICA SPOILER
The markets will struggle to sustain their rallies because weather in South America looks beneficial for large corn and soy harvests in the spring, Hoops said.
Also, the USDA will release its final U.S. crop production forecast for the 2013/14 marketing season on Jan. 10. Many analysts expect the department to raise its harvest estimates.
“Once a monster crop in South America can be confirmed, look for China to begin cancelling U.S. soybean purchases and switch to buying from South America,” Hoops said.
