Wheat prices collapsed this month among profit-taking, but the decline is estimated short-term, based on fundamentals and the result from the winter weather. Could the wheat market reach the $7 point in the first quarter?
The March futures surged $0.1325, or 2.08%, to $6.50 per bushel at 14:19 GMT on Tuesday on the Chicago Board of Trade (CBoT). The commodity is getting off a 1% weekly decline, adding more than 1% to its 2020 gain.
The US is being covered by Arctic-like circumstances, with snow and freezing temperatures affecting 100 million Americans.
The blast of winter spread as far south as Texas
But this is generating concerns regarding possible crop damage from freezing temperatures.
Old Man Winter’s late-season force has heightened worries that the wintry blast could hit parts of the US Plains where wheat is produced. But the Commodity Weather Group recently estimated that winterkill inducted by the freezing temperatures were intimidating 10% of US soft wheat crop and 15% of the hard wheat crop.
Although some traders suppose it might be early to judge if the winter weather will have consequences for wheat crops, the market’s response has been mixed. Prices have risen to a one-week high, but the Commodity Futures Trading Commission’s (CFTC) weekly commitments of traders record found that non-commercial traders raised their net-short positions in wheat.
In other industry news, the Russian Grain Union (RGU) is urging that a permanent floating duty on wheat shipping from Russia could point to a decline in production and higher prices. Moscow will be requiring the export levy on June 2.