Wheat futures rallied to six-and-a-half-week highs after a series of severe weather warnings were issued by in Kansas, Oklahoma, and Texas, with strong winds, hail, and thunderstorms all expected to hit the heart of the US’ hard red winter territory.
“Outbreak of tornadoes and severe thunderstorms expected over parts of the southern Plains this afternoon and tonight,” the US National Weather Service on Monday.
The front month Kansas City HRW contract rallied over 5% from Friday’s close to $4.395/bu at 1515 London time, its highest level since April 4.
By 1705 in London it was trading 4.5% higher from Friday’s close at $4.3675/bu.
It dragged Chicago wheat 4% higher with it to its highest price since February 25, with SRW touching $4.8125/bu by 1705 in London.
“(There are) concerns about the quality of the young winter wheat, as excessive moisture increases the risk of fungal infections,” Commerzbank said in a client note Monday.
It follows a series of torrential rains that have hit the US in recent weeks, flooding croplands and delaying corn and soybean plantings across the Midwest.
Winter wheat, which has already been in the ground for several months, had appeared to avoid the worst effects of the wet weather, although questions are now being asked of its impact on the developing crop.
The effects were felt outside of the US futures market, with sellers in the cash market stepping back to mull the impact Monday’s rally.
“It’s really difficult to find sellers, they are waiting for (tonight’s USDA) sowing numbers and fear a short squeeze,” a broker told Agricensus.
The US is forecast to produce 51.6 million mt of wheat in the 2019/20 marketing year according to the USDA’s monthly WASDE report published earlier this month, a 0.6% year-on-year increase after planted area slumped to its lowest level since 1909.