Wheat prices tumbled to an eight-month low as persistent
precipitation raised hopes for the breaking of the drought which has tested US
winter wheat seedlings, while investors doubted a key order had gone America's
In Chicago, wheat for March slumped 3.1% at one point to $6.91
a bushel, the weakest for a spot contract since June last year.
The better-traded May lot touched $6.97 ½ a bushel, the
contract's weakest since June and a fall of 3.2%.
The decline's reflected in part disappointment that it appeared
that US wheat had received a small proportion, if any, of a 575,000-tonne import
order by Saudi Arabia.
While Saudi's grain buyer, the Grain Silos and Flour Mills
Organisation, did not announce origin details, many investors considered the
pricing and merchants of the winning lots did not reflect US supplies.
"It didn't look like there was any US stuff in there," Jerry
Gidel, chief feed grain analyst at Chicago broker Rice Dairy, said.
Furthermore, the extension of rains in drought-hit parts of
the US Plains, and Corn Belt, raised hopes that US winter wheat, which entered dormancy
in its worst condition on records going back to the 1980s, could recover before
"The trend of these storms just seems to be getting bigger,"
Mr Gidel said.
At Martell Crop Projections, Gail Martell said: "The weather
pattern has suddenly reversed course late in winter generating frequent storms
and heavy precipitation in the central US", and noting forecasts for more.
"A second wave of heavy precipitation is expected in the US breadbasket.
The GFS model forecasts a deep wave of low pressure Friday in southern
California, strengthening Saturday over the south west US Desert, eventually
lifting north eastward into the Great Plains
"The preliminary forecast indicates 0.50-0.80 inches of
moisture in southern Oklahoma, but much heavier amounts in northern Oklahoma,
and up to 1.50 inches in central Kansas. Eastern Colorado, north Kansas and Nebraska
would receive up to 2 inches of moisture.
"Hard red winter wheat drought is rapidly resolving. The
next storm, if it develops as expected, may even generate a moisture surplus."
Even as of last week, drought was still widespread in parts
of the US Plains which form the core of the hard red winter wheat growing area,
and still had 75% of Texas in its grip, and 100% of many states further north,
such as Kansas and Nebraska.
In the western Corn Belt, all but a fraction of Iowa, the
crop corn and soybean producing state, was rated as being in drought.
However, official data last week indicated that wheat
seedlings had responded to initial rains which hit last month, with crop
condition seen improving, if remaining at historically weak levels.
Wheat vs corn
Wheat for March stood 2.0% lower at $6.99 a bushel with some
20 minutes of trading to go in Chicago, with the May lot down 2.2% at $7.05 a
At that level, the March contract stood at a discount of
nearly $0.22 a bushel to March corn, with the May wheat contract less than
$0.03 a bushel from losing its premium.
Wheat, which has a slightly higher feed value to corn per
given weight, usually has a premium over its fellow grain, but particularly low
levels of corn have tested that relationship.