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Grains take off on weather, demand

04/25/2013 @ 2:30pm

U.S. wheat futures rose Thursday on worries about recent freeze damage to crops in the Plains.

Chicago Board of Trade May wheat futures settled up 9 1/2 cents or 1.4% at $7.01 1/4 a bushel.

KCBT May futures for hard red winter wheat, the variety grown in the Plains, rose 24 3/4 cents or 3.3% to $7.63 3/4 a bushel. MGEX May wheat rose 5 1/2 cents or 0.7% to $8.23 1/4 a bushel.

After recent bouts of freezing temperatures damaged wheat crops in the Plains, temperatures again fell to threatening levels for crops on Wednesday morning.

The combination of freezes and severe drought conditions has particularly damaged crops from the Texas panhandle to southwestern Kansas and southeastern Colorado.



Prices are reacting on Thursday to the latest cold temperatures as farmers and analysts begin to assess the extent of the damage.

"The market is finally taking notice that this year's crop may indeed have been severely damaged by not just one, but a series of freezes," said Dan Manternach, senior economist with agriculture-advisory firm Doane Advisory Services in St. Louis. Damage reports are starting to come in after this week's freezing temperatures, he said.

The freeze damage this week likely reduced potential output from the hard red winter wheat crop by 3% to 5%, said Commodity Weather Group meteorologist David Streit. Combined with two previous rounds of freezing temperatures in recent weeks, the crop's potential size has likely shrunk by 8% to 10%, he said.

The rise in wheat prices Thursday was "particularly impressive" because it occurred despite lower-than-expected wheat export sales in a government report, Mr. Manternach said.

The U.S. Department of Agriculture on Thursday reported net wheat export sales of 306,400 metric tons in the week through April 18. Analysts had expected sales of 500,000 to 800,000 tons.

Traders are also watching to see how delayed planting of spring wheat will be in the upper Midwest, as snowpack and cold temperatures there have slowed seeding. Warmer temperatures in coming days could melt the snow and cause flooding in areas including North Dakota, forecasters say.

Farmers in most areas are likely to plant spring wheat a "couple of weeks" later than they usually would, Mr. Streit said.

Corn futures rose Thursday on a large export sale to China and on concerns that recent price declines left corn undervalued at a time of tight supplies.

The USDA Thursday private exporters reported selling 300,000 metric tons of corn to China for delivery in the next marketing year, which starts Sept. 1. The USDA also announced an export sale of 240,000 tons of corn for delivery to unknown buyers during the next marketing year.

May corn futures rose 5 3/4 cents or 0.9% to $6.45 1/4 a bushel.

Soybean futures rose on worries about tight current supplies, recovering from a price decline on Wednesday.

May soybean futures rose 19 1/2 cents or 1.4% to $14.23 1/2 a bushel.


Write to Owen Fletcher at owen.fletcher@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
April 25, 2013 14:47 ET (18:47 GMT)
DJ UPDATE: U.S. Wheat Futures Rise On Freeze Damage To Crops->copyright


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