GRAINS-Wheat rises nearly 2 percent as hot weather adds to crop woes

Tue May 6, 2014 2:29am IST

* Intense heat, wind in southern U.S. Plains stresses wheat
    * Trade monitoring unrest in key Ukraine port city of Odessa
    * Corn higher as wheat soars, U.S. planting progress lags
    * Soy lower after Canada reports record-high canola stocks

 (Updates with closing prices, USDA crop progress figures)
    By Julie Ingwersen
    CHICAGO, May 5 (Reuters) - U.S. wheat futures jumped nearly
2 percent on Monday as scorching temperatures in the southern
Plains deepened fears about weather damage to the U.S. hard red
winter wheat crop.
    The gains in wheat helped lift corn after heavy losses last
week, but soybeans fell on talk of U.S. soy imports from South
America and record-high Canadian stocks of canola, a competing
oilseed.
    At the Chicago Board of Trade, most-active July wheat 
settled up 13 cents at $7.29 per bushel, after trading as high
as $7.40-1/2. Kansas City July hard red winter wheat 
ended up 10-1/4 cents at $8.32 after touching $8.43, its highest
level since December 2012.
    July corn ended up 8-1/2 cents at $5.08 a bushel while
July soybeans finished down 7-1/2 cents at $14.63-1/4 a
bushel.
    Wheat advanced after weekend temperatures in parts of
Kansas, the top U.S. wheat state, topped 100 degrees Fahrenheit
(38 Celsius), coupled with high winds. Crops there were already
reeling after months of drought. 
    "The crop came into this heat already stressed from cold
weather and stressed from an ongoing drought," said Sterling
Smith, a futures specialist with Citigroup in Chicago.
    "The issues with the heat were exacerbated by high winds,
and there were reports of poorly developed crops being blown
away in parts of eastern Colorado," Smith said.
    An annual crop tour of Kansas on Thursday estimated the
poorest production prospects in more than a decade, while
Informa Economics slashed its U.S. winter wheat crop estimate by
120 million bushels to 1.496 billion bushels in a client note on
Friday. 
    After the CBOT close, the U.S. Department of Agriculture
said 31 percent of the U.S. winter wheat crop was rated in good
to excellent condition, down 2 percentage points from the
previous week and in line with trade expectations.
 
    The USDA is scheduled to publish its first 2014-15
supply-and-demand forecasts on Friday for both U.S. and world
crops. 
    Rising tensions in Ukraine lent additional support to the
grains complex. Ukraine's interior minister said on Monday he
had drafted a new special forces unit into the southern port
city of Odessa after the "outrageous" failure of police to
tackle pro-Russian separatists in a weekend of violence that
killed dozens. 
    But market worry over the situation in Ukraine was tempered
by the fact that trading and port activity appeared to be
continuing normally, traders said.
    
    CORN RISES, SOY RETREATS
    Corn followed wheat higher, rebounding after a selloff last
week briefly sent prices below psychological support at $5 a
bushel.
    Additional support stemmed from reminders of strong export
demand. The USDA reported export inspections of U.S. corn in the
latest week at 1.239 million tonnes, within a range of trade
estimates.
    Traders also noted concern about a slow start to planting in
the United States, the world's top supplier. After the close,
the USDA the U.S. corn crop was 29 percent seeded,
lagging the five-year average of 42 percent and behind an
average of trade estimates for 33 percent. 
    "The trade was a little bit surprised that the (projected)
planting progress was not higher, given how much producers are
starting to move forward," said Mike Zuzolo, president of Global
Commodities Analytics in Atchison, Kansas.
    Soybeans turned down after Statistics Canada reported March
31 stocks of canola, a competing oilseed, at a record-high 9.02
million tonnes. 
    Also bearish, the USDA pegged export inspections of U.S.
soybeans in the latest week at 99,502 tonnes, below a range of
trade estimates for 100,000 to 200,000 tonnes.
    Talk of South American soy cargoes being imported into the
United States added pressure.
    "Guys in Chicago are saying there are upwards of 12 cargoes
of South American beans headed this way, with another two to
four cargoes being pencilled in as well," Zuzolo said.
    USDA after the close said the U.S. soybean crop was 5
percent planted, behind the five-year average of 11
percent and below an average of analyst estimates of 8 percent. 
    
 Prices at 3:31 p.m. CDT (2031 GMT)      
                              LAST      NET    PCT     YTD
                                        CHG    CHG     CHG
 CBOT corn                  508.00     8.50   1.7%   20.4%
 CBOT soy                  1463.25    -7.50  -0.5%   11.5%
 CBOT meal                  478.70    -1.70  -0.4%    9.4%
 CBOT soyoil                 41.17    -0.34  -0.8%    6.1%
 CBOT wheat                 729.00    13.00   1.8%   20.4%
 CBOT rice                 1551.50     2.50   0.2%    0.0%
 EU wheat                   216.50     1.25   0.6%    3.6%
 
 US crude                    99.38    -0.38  -0.4%    1.0%
 Dow Jones                  16,531       18   0.1%   -0.3%
 Gold                      1309.56     9.74   0.7%    8.7%
 Euro/dollar                1.3873   0.0005   0.0%    1.6%
 Dollar Index              79.5040  -0.0120   0.0%   -0.7%
 Baltic Freight               1017       24   2.4%  -55.3%
 

 (Additional reporting by Gus Trompiz in Paris and Colin Packham
in Sydney; editing by G Crosse, Muralikumar Anantharaman, Keiron
Henderson and Diane Craft)

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