Wheat leads grains higher on potential freeze damage, demand
U.S. wheat futures rose for the first time in three sessions as freezing weather in the Midwest threatened crops and Egypt--the world's biggest importer of the grain--bought U.S. inventories.
Subzero temperatures from the Dakotas to Ohio this week have damaged winter-wheat varieties that were planted in autumn and will start growing again in March or April. Wind chills fell to a low as 30 degrees below zero in parts of Indiana and Minnesota, according to the National Weather Service.
So far, about 5% of the winter-wheat crop, the main variety grown in the U.S., has been damaged, according to private forecaster Commodity Weather Group LLC. Depending on the extent of the damage, wheat can recover from so-called winterkill if it later receives warmer weather and ample moisture.
"It's really cold, and we had some hurricane-force winds the other night," said Jason Britt, president of Central States Commodities, a brokerage in Kansas City, Mo. "Of course, you have to kill off the wheat crop three or four times before you're sure it's dead."
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Meanwhile, Egypt's state-run grains purchasing agency said Tuesday it bought 240,000 metric tons of wheat from Russia and the U.S. for delivery in March. Russia will supply 180,000 tons and the U.S. will supply 60,000 tons, according to the agency. The average price was $299.85 a ton.
The sale to Egypt signaled to traders that U.S. prices have become more competitive with rival producers and that exports could pick up, analysts said.
Wheat for March delivery, the front-month contract, rose 2 1/2 cents, or 0.4%, to $5.66 a bushel at the Chicago Board of Trade.
Wheat futures have slid 27% in the past year, hurt by forecasts for rising global production. Canada said it produced a record 37.5 million tons of the grain last year and Australia said its growers collected the third-biggest crop in the country's history. The U.S. is expected this year to be the world's biggest exporter of the grain, followed by Canada and Australia, according to the U.S. Department of Agriculture.