Wheat futures recovered to set course for their longest winning streak since September after Canada revealed that a jump in its inventories had fallen short of expectations, despite a record harvest and logistical setbacks to exports.
Canada's wheat inventories ended 2013 at 28.4m tonnes, up 38% year on year, "as a result of a 38% annual increase in wheat production", Statistics Canada said.
However, the figure came in more than 500,000 tonnes short of that expected by investors, who had forecast a bigger impact from the record harvest, and the drag to Canada's exports from an infrastructure squeeze, exacerbated by cold weather.
Separate data on canola showed a bigger rise, of 55% to 12.6m tonnes, in inventories, some 200,000 tonnes more than traders had forecast, again reflecting record production last year and port and rail hiccups.
The data helped wheat futures in Chicago recover from small losses just before the data were released to stand at $5.74 ¾ a bushel at 10:00 local time (16:00 UK time), up 2.0% on the day.
"Canada looks like it has done a better job than people had thought at getting rid of its wheat," a UK trader told Agrimoney.com.
"It still has a lot to dump on the market, but with futures looking a bit oversold, it gives investors another reason to cover some short positions."
As an extra, technical boost the price gain meant that the March contract, which regained its 10-day moving average in the last session, returned above its 20-day moving average for the first time in two months.
Official US data overnight showed the condition of US winter wheat in the top growing state, Kansas, declining sharply, amid worries over winterkill.
The StatsCan data nonetheless appeared to reveal substantial impact from the country's tight logistics, with the inability to shift crops from growers' stores meaning that on-farm stocks of all major crops rose significantly year on year, while commercial inventories fell.
For wheat, on-farm stocks soared 52% to a record 25.0m tonnes, while commercial inventories dropped 19.2% to 3.4m tonnes.
For canola, the amount of the rapeseed variant stored on-farm was, at 11.7m tonnes, 55% higher than a year before, while commercial stocks were 14.6% smaller.
The International Grains Council said last week that Canadian crop export volumes "are likely to be capped by logistical problems in transporting large volumes by rail.
"Capacity on the network is limited, and exporters are competing not only with alternative grains, but also with other bulk commodities, such as oil, coal, sand and mineral ores.
"Extremely cold weather is compounding the problem."
In Winnipeg, canola for March delivery stood unchanged at Can$426.40 a tonne.