Markets

Wheat leaps to 2-month peak on weather threat

Published Updated

Soybean futures were choppy after posting initial losses as crude oil headed lower and the dollar firmed.

At 10:00 a.m. CDT (1500 GMT), CBOT wheat for May delivery was up 20-1/2 cents per bushel at $8.20, May corn was up 15-3/4 at $7.53, and soybeans for May were up 3-1/2 cents at $13.84 per bushel.

High-protein wheat futures in Kansas City and Minneapolis were also higher. Kansas City Board of Trade May hard red winter wheat futures were up 2.28 percent, or 21-3/4 cents, at $9.54-1/4 per bushel.

Excessive rainfall has delayed US corn plantings as supplies of the feed grain dwindle. Stocks this summer are forecast to be their tightest since the 1930s, and little relief appears likely.

"It's all weather. The two-week forecast doesn't look good for corn planting. It indicates we could lose corn acreage from the March plantings," said Terry Reilly, an analyst for Citigroup.

The US Department of Agriculture in March forecast corn acreage this year would be the second largest since 1944.

There is still time for farmers to plant corn and realize good yield per acre. As a general rule, corn yield potential should not decline until plantings are delayed past mid-May.

CORN SEEDINGS SEEN AT 13 PERCENT

USDA will release its updated weekly crop progress report Monday afternoon. Analysts' on average expect US corn plantings at 13 percent, below the five-year average of 22 percent. Half of the crop had been planted at this time a year ago.

A drought is trimming production prospects for the top quality milling US hard red winter wheat crop growing in the US Plains, and excessively wet weather has slowed seedings of high-protein spring wheat in the northern US Plains and Canada.

"It's still dry in Texas and Oklahoma. Production there could be cut in half from a year ago," Reilly said.

Last year, the two states produced nearly 250 million bushels of hard red winter wheat or just over 10 percent of the total US wheat crop.

Kansas was the largest US producer of winter wheat last year, producing 360 million bushels or about 16 percent of the US wheat crop. Growers are concerned about yield losses there as well because of drought in the southwest and west-central portions of the state.

With spring wheat plantings delayed, The Minneapolis Grain Exchange May spring wheat futures contract gained 2.79 percent, or 26-1/2 cents per bushel, at $9.78.

Global weather problems also rattled the markets with dry weather a concern for grain production in western Europe and China.

Very little relief from dryness is expected this week in the North China Plain and dryness continues to build in central and northwest Europe, according to MDA EarthSat Weather.

Copyright Reuters, 2011