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Published January 07, 2014, 10:53 AM

Grain prices rise on bitter US cold, Argentine heat wave

U.S. grain futures rose on Monday as bitterly cold temperatures threatened to damage dormant wheat crops in the United States and a heat wave put Argentina’s corn harvest at risk.

By: Tom Polansek, Reuters

CHICAGO — U.S. grain futures rose on Monday as bitterly cold temperatures threatened to damage dormant wheat crops in the United States and a heat wave put Argentina’s corn harvest at risk.

Soybean futures jumped amid technical buying, while soymeal gained on expectations that the brutal U.S. cold will increase demand for livestock feed, traders said.

The coldest weather to hit the central United States in two decades disrupted grain and livestock shipments throughout the nation’s farm belt.

An arctic blast that swept across the heartland pushed morning lows to -4 to -10 degrees Fahrenheit in the top wheat state of Kansas, while Nebraska and Colorado had morning lows in the -12 to -20 degree range, says MDA Weather Services forecaster Don Keeney.

Cold weather can damage dormant wheat and boost demand for livestock feed because animals eat more to generate energy to keep warm.

“The frigid, breezy conditions are stressing livestock and resulting in dangerously low wind chill temperatures,” says Brad Rippey, agricultural meteorologist for the U.S. Department of Agriculture. “Snow is providing some protection for winter wheat on the northern and central Plains, although coverage is patchy.”

Chicago Board of Trade March wheat hit a session high of $6.12-3/4 a bushel, its highest since Dec. 23, before closing unchanged at $6.05-3/4 a bushel. Kansas City Board of Trade March wheat rose 1-1/2 cents to $6.44 a bushel.

March corn gained 4-1/4 cents to $4.27-3/4 a bushel. March soybeans rose 5-1/2 cents to $12.76-3/4 a bushel, and March soymeal climbed $6.70 to $413.80 per tonne.

Corn rebounds

Corn futures rose amid concerns about Argentina’s harvest after front-month March corn fell to a contract low on Friday.

Argentina’s recently planted corn and soy crops will be tested by a heat wave in the days ahead until rains hit the Pampas farm belt late in the week, a local meteorologist said. The country is the world’s No. 3 exporter of corn and soybeans and the biggest supplier of soyoil and soymeal.

The corn market has recently been under pressure from rising global supplies and the cancellation of U.S. corn purchases by China. The U.S. is the world’s top grain exporter.

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, traders say.

“Some had expected Chinese imports to outpace USDA projections this year, however it now looks as if the opposite scenario is playing out,” says Joseph Vaclavik, president of Standard Grain.

Awaiting USDA crop report

Private exporters reported the sale of 110,600 metric tons of U.S. corn to Mexico for delivery in the marketing year that started on Sept. 1, USDA says.

Exporters sold 160,000 metric tons of U.S. wheat to unknown destinations for the marketing year that begins on June 1.

USDA on Jan. 10 is set to update its estimates for global grain supplies and demand and to issue its final U.S. crop production forecasts for the 2013/14 marketing season.

Many analysts expect USDA to raise its estimates for U.S. corn and soy production and for global corn and soy inventories.

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