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Cash wheat hits $10

02/03/2011 @ 10:44am

CHICAGO (Dow Jones)--Export demand and concerns about planting have pushed U.S. cash prices for hard red spring wheat above $10 a bushel for the first time in 31 months.

Demand for spring wheat, a high-protein variety grown in northern Plains states like North Dakota, has been strong after rains lowered the quality of wheat in Canada and Australia. Traders are worried wet weather may prevent farmers from planting a big crop this spring to replenish supplies because heavy snows could lead to flooding and saturated soils.

"Rivers and streams are still running full. It could be a mess," said Mike Krueger, president of the Money Farm, a grain marketing advisory service near Fargo, N.D.

National cash price indexes maintained at the Minneapolis Grain Exchange last traded at $10.05 1/2 a bushel for hard red spring wheat, reflecting an average basis of -4 3/4 cents relative to Wednesday's settlement of the MGE hard red spring wheat futures contract. The average cash price jumped from $9.77 a day earlier.

Snow cover should remain "very deep" across key growing areas in North Dakota, eastern South Dakota and Minnesota, according to MDA EarthSat Weather, a private weather firm. Hard red spring wheat is often blended with lower-quality wheat varieties, such as soft red winter wheat, or used to make bread.

National cash prices averaged $8.40 for hard red winter wheat, another good-quality variety, reflecting a basis of $1.12 3/4 compared with the Kansas City Board of Trade March wheat futures contract. Cash prices averaged $7.92 for soft red winter wheat, a basis of -71 cents against Chicago Board of Trade March wheat.

National cash price indexes maintained at the MGE last closed at $13.77 1/2 a bushel for soybeans, reflecting an average basis of -66 1/2 cents relative to settlement of the CBOT March soybean futures contract. Domestic cash prices averaged $6.26 1/4 for corn, reflecting a basis of -43 cents relative to CBOT March corn.

Crop Weather

Parts of the country are digging out after heavy snow fell during the past few days. The Chicago area and northeastern U.S. were hit hard, but precipitation had mostly stopped Thursday morning, according to Telvent DTN, a private weather firm.

Below-normal temperatures are blanketing the Plains and western Midwest, raising concerns about potential damage to winter wheat that isn't protected by a layer of snow. Temperatures are expected to rise to near normal or above by Saturday before dropping again next week, Telvent DTN said.

Strong winds also pose a risk to hard red winter wheat in the Plains because the crop doesn't have a strong root system because of dryness. An area from west Texas through the Plains and western Midwest are on notice for high winds, according to Telvent.

-By Tom Polansek, Dow Jones Newswires; 312-341-5780; tom.polansek@dowjones.com

(END) Dow Jones Newswires

February 03, 2011 10:54 ET (15:54 GMT)

Copyright (c) 2011 Dow Jones  Company, Inc.

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