Corn, Wheat Rebound on Concern U.S. Crops May Be Hurt by Freezing Weather
Corn and wheat futures rose in Chicago on speculation that freezing weather will harm crops in the U.S., the biggest exporter of both grains.
Freezing or near-freezing temperatures over the weekend may stunt Midwest corn that has begun to emerge and damage wheat that is maturing from northern Kansas to southern Michigan, said Allen Motew, a meteorologist at QT Weather in Chicago. Above- normal rains next week across most of the eastern U.S. will delay final corn planting after a record start, Motew said.
“The cold weekend forecast is encouraging people to cut short positions,” said Tim Hannagan, a market analyst for PFG Best Inc. in Chicago. “People are buying on the price breaks because we have gotten past the peak in the bearish supply news.”
Corn futures for July delivery rose 0.75 cent, or 0.2 percent, to $3.72 a bushel on the Chicago Board of Trade, erasing an earlier loss of 1.1 percent. The most-active contract fell 0.9 percent this week after gaining 3.9 percent last week on speculation the Greek credit crisis slow the global recovery and demand for the grain to produce food, animal feed and fuel.
Wheat futures for July delivery rose 2.25 cents, or 0.4 percent, to $5.105 a bushel, after earlier falling 1.9 percent. The price rose 1.5 percent this week, the fifth gain in six weeks.
About 68 percent of the U.S. corn crop was planted as of May 2, up from 50 percent a week earlier and 32 percent a year earlier, the Department of Agriculture said this week. The average for the previous five years was 40 percent and the previous record for this time of year was 63 percent in 2004. An estimated 19 percent of the plants had emerged from the ground, compared with the five-year average of 9 percent.
In the northern Great Plains, 60 percent of the spring wheat was planted, up from 43 percent a week earlier, the USDA said. The average for the previous five years was 47 percent.
Corn prices also rose on speculation that China, the second-biggest consumer, will increase purchases after drought reduced last year’s crop and the government mandated increasing meat production this year, Hannagan said.
There are signs that the domestic crop in China was smaller than forecast. Corn-trading companies had bought 42 million metric tons (1.665 billion bushels) of last year’s harvest from farmers in the main growing regions as of April 25, a reduction of 23 million tons from a year earlier, a state-owned web portal said.
State-held inventories also may be lower. China will offer 580,000 tons of corn in state auctions on May 11, less than half the amount it made available this week, according to data on the website of the National Grain & Oil Trade Center on May 4.
This week, China sold 1.22 million tons of reserves, about 88 percent of the 1.39 million tons offered, according to the grain center. Of those sales, the auctions in the top-producing regions sold all the supply offered, as in the previous three sales, the data showed.
“Chinese consumers keep swallowing up everything the government sells from state reserves,” Hannagan said. “The demand is rising, and once the reserves are depleted, the Chinese will need to increase imports from the U.S.”
Corn is the biggest U.S. crop, valued at $48.6 billion in 2009, government figures show. Wheat, valued at $10.6 billion, is the fourth largest, behind soybeans and hay.
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