Afternoon Recap by Bob Burgdorfer

Wheat jumps to two-week high as frost hits crop

Published on: Apr 15, 2014

April 15, 2014

Soybean futures charged higher on Tuesday as processors crushed 153.84 million bushels of beans in March, much more than expected, and up 8.6% from February and up 12% from a year earlier.

The surge in domestic use coupled with better-than-expected soybean exports this year has drawn down U.S. soybean supplies to critically low levels. Higher prices for soybeans and soymeal will either slow usage or prompt soybean imports. Last week a cargo of Brazilian soybeans were imported to the U.S. Gulf Coast and trade sources said more shipments were expected.

Frost in the central and southern Plains and heightened tensions between Ukraine and Russia pushed wheat higher. Corn was supported by soybeans and wheat and posted thin gains.

Soybeans recovered all that they lost last week and settled at a nine-month high on the continuous charts. The bullish domestic data had traders temporarily setting aside recent bearish news that China may default on some purchases and that more Brazilian soy bears may be coming in.

U.S. soybean exports also have been a bright spot this year, with USDA's weekly sales on Thursday of 10.6 million bushels for old- and new-crop business slightly better than expected. On an annual basis, old-crop sales are nearly 3% more than what USDA had forecast.

Spring planting will be starting soon and midday forecasts have rain in parts of the Midwest over the next two weeks. USDA has yet to report soybean planting progress in its weekly crop updates.

Soybean harvest in Argentina should progress under clear skies the next 10 days, while rain could impede portions of Brazil's harvest, Commodity Weather Group said on Tuesday.

In Chicago, May soybeans closed up 25 cents at $15.01-1/4, the highest close for a lead contract since July last year. November closed up 9 cents at $12.29.

What to Look For – These high prices could encourage more imports from South America, which is harvesting now.

Corn inched higher in old-crop months in moderate trading but were slightly lower in new-crop ones. New tensions in the Ukraine supported old-crop corn as trade and crop planting in that region could be disrupted.

Corn planting was 3% done last week, which was about as expected. The below-normal temperatures that blanketed the Midwest early this week likely halted additional planting, but it is too early in the season to be concerned about planting delays.

Chicago May corn closed up 3/4 cent at $5.03-3/4 and new-crop December was down ¼ at $5.03-1/4.

What to Look For – Weather forecasts that will determine how quickly farmers can get into the fields. While it is too early to be concerned, delays will only increase market anxieties.

Hard red winter and soft red winter wheat finished sharply higher on the frost in the Plains crop areas and on the Black Sea tensions.

Winter wheat in Kansas, Oklahoma and Texas has been hurt by drought conditions and by this week's cold weather and frost. Under good conditions, wheat can grow out of frost damage, but that may be difficult task for this year's drought-stressed crop.

USDA crop reports late on Monday rated winter wheat 34% rated good to excellent, 34% fair, 20% poor and 12% very poor.  That was slightly worse than the previous week. More than half of the Texas and Oklahoma wheat was rated poor to very poor.

May SRW wheat closed up 23 cents at $7.01-3/4 and July also rose 23 to $7.09-3/4. May HRW wheat gained 23-1/2 cents to $7.65-1/2 and July rose 23-1/4 to $7.71-1/2.

What to Look For – The crop in the Plains needs rain and warm weather. The latest 6- to 10-day forecast was wetter for the central and southwestern Plains.

Afternoon Recap by Bob Burgdorfer

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