Black Sea Weather Fuels Wheat Rally – Daily Grain Highlights

-Wheat for March delivery rose 2.2% to $6.13 1/2 a bushel on the Chicago Board of Trade on Thursday, as cold weather forecasts posed a threat to Black Sea crops.

-Soybeans for March delivery fell 0.7% to $12.67 1/2 a bushel.

-Corn for March delivery rose 0.3 to $4.66 1/2 a bushel.

Cold Snaps: Wheat futures bounced back from early losses as cold weather threatened global supplies. The Black Sea region “endures a round of arctic cold that produces winterkill worry,” AgResource said in a note. “It’s the length of the Black Sea chill and whether ice will form…that will determine crop losses,” the firm said. Analysts have also pointed to possible snow conditions in the U.S. which would make it harder to move grains to export ports in the next few days.

Brazilian Damage: South American weather conditions remained a downward pressure on grains prices. “The funds beginning to establish short positions along with improvement in the South American weather situation and weak technical picture in soybeans will make [it] hard to sustain rallies,” Summit’s Tomm Pfitzenmaier said in a note. He said corn prices were also under the impact of South American production. Analysts, however, say the damage from months of drought is done and production, mainly in Brazil, is likely to be lower than previously thought.

Export Worries: Traders worry that China may be done buying U.S. soybeans for now, ADM’s Steve Freed said in a note. “July Brazil soybean export prices [are] 85 cents lower than US,” he said. Recent rainfall is expected to reduce some of the damage caused to Brazilian soy and corn crops by a longer-than-usual dry season, although the country’s production estimates are likely to be trimmed. “Trade will watch CONAB and USDA [estimates] of Brazil crop,” Freed said.

Corn Struggles: Higher stocks are keeping corn futures from rising, Total Farm Marketing’s Naomi Blohm said in a note. “Last year at this time, corn ending stocks were around 1.4 billion bushels–that justified $6.00 corn,” she said. “Now ending stocks are at 2.1 billion bushels. That is why corn is struggling to get back up to $5.00.” The last time the front-month contract traded at $5 a bushel was in October. Next week’s WASDE report will show whether stocks are declining, and how fast.

Tags: soybeans, wheat, U.S., China, corn, export, prices