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Wheat Surges as Flood Waters Threaten Winter Crops
Wheat futures closed higher as a foot of rain forecast for parts of the Midwest threatens U.S. wheat crops that should, at this point, be dormant for the winter.
Flash flood warnings were issued today for parts of Oklahoma, Arkansas, Missouri and Illinois, where hard-red winter and soft-red winter wheat is grown, according to the National Weather Service.
The severe flooding may be taking its toll on wheat crops that are normally buried under a blanket of snow by now.
Issues with the soft-red winter crop has led to an inverse price relationship between contracts traded in Chicago and hard-red winter wheat futures that were formally traded in Kansas City. Under normal circumstances, KC contracts carry a premium to Chicago wheat, but issues with the soft winter crop has led to the latter being priced higher for several months.
The contracts have neared parity recently only to again widen as flooding is mostly threatening soft varieties grown in the Midwest.
Wheat futures on the Chicago Board of Trade rose 9 cents to $4.75 1/2 a bushel on Tuesday. Kansas City wheat futures added 7 cents to $4.73 a bushel.
Soybean futures rebounded from yesterday’s losses in thin holiday trading as investors who were short the market, or bet prices would fall, buy back their contracts and take profits.
Soybean futures for March delivery rose 4 cents to $8.65 1/4 on the CBOT. Soymeal for March delivery gained 60 cents to $269.70 per short ton. Soyoil rose 0.31 cent to 30.75 cents a pound.
Corn futures for March delivery added 1 3/4 cents to $3.63 3/4 a bushel.
In the outside markets, West Texas Intermediate oil futures, the U.S. benchmark, gained 3% while Brent crude, the international standard, added 3.6%. Natural gas saw large gains for a second day, surging 6.5% on Tuesday as winter weather sets in.
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