Wheat markets rose sharply higher Thursday, driven by stressed crops in Montana and the Dakotas that point to failing spring wheat crops.
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Spring wheat futures for July closed up 5.1% at $7.41 a bushel, the highest close since May 15, 2014.
"Reports from the region suggest that the situation is getting worse and not better. Some areas suffered from some cold temperatures last week in the worst areas to hurt the crops even more. Some of the crops froze," said Jack Scoville, vice president of Price Futures Group in Chicago, in a note to clients.
U.S. spring wheat is in bad shape, with only 40% in good or excellent condition versus 72% this time last year.
Forecaster MDA Weather Services says over the next six to 10 days, the northwestern Midwest and northeastern Plains are expected to be slightly drier. Drier and warmer conditions in the northern plains would only add to the stress on spring wheat, the firm said. While dry and warm conditions in the central and southern plain would be favorable to winter wheat harvesting.
Arlan Suderman, chief commodities economist at brokerage INTL FCStone in Kansas City, Mo., said the situation in spring wheat is impacting the entire wheat complex. Spring wheat, the highest protein of the wheat varieties, is typically blended with lower qualities to reach baking quality. The shortage of spring wheat, he said, is pushing buyers into other wheat markets.
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"They're bidding up the cash market and that is lifting demand for hard red winter wheat and in Chicago they're getting out of short positions," he said.
CME wheat for July rose 5% to $4.80 a bushel, the highest since June 9, 2016.
Meanwhile, traders in grains and soybeans are looking ahead to Friday's U.S. government update on stocks and acreage.
Analysts surveyed by the Wall Street Journal are expecting 89.82 million acres of corn versus 94 million last year, 89.946 million acres of soybeans versus 83.433 million last year and 46.045 million acres of wheat versus 50.154 million last year.
Richard Feltes at R.J. O'Brien in Chicago said he expects an initial bearish reaction to Friday's report as he expects that stocks and acreage will be higher than the trade is anticipating. He said to expect any short-term selloff to be met with bargain hunter who expect the contracts to trade higher on weather concerns.
CME corn for July rose 0.9% to end at $3.68 a bushel, and soybeans were up 0.2% at the close at $9.08 a bushel for July.
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(END) Dow Jones Newswires
June 29, 2017 15:07 ET (19:07 GMT)