GRAINS: U.S. Wheat Remains Strong as Weather Concerns Overrule USDA Data – Reuters

Wheat Prices Rise Amid Weather Concerns and Eased Dollar

• Weather conditions in Australia and the U.S. contribute to price increases.
• U.S. Department of Agriculture’s (USDA) updated crop estimates raise stock projections for wheat and corn.
• Market monitors China’s inflation policy after a 28-month high in inflation rates.

By Manolo Serapio and Gus Trompiz

PARIS/SINGAPORE, Dec 13 (Reuters) – U.S. wheat futures made a slight recovery on Monday, overcoming previous losses as ongoing weather-related supply concerns overshadowed the USDA’s increased stock forecasts.

U.S. corn and soybean futures also turned positive thanks to a slight weakening of the dollar, which helped make U.S. commodities more competitively priced on the global market.

Market focus remains on the effects of heavy rainfall in Australia and dry conditions in certain regions of the United States, which are creating potential supply constraints for flour-grade wheat. This followed a drop on Friday when the USDA raised projections for U.S. and world wheat stocks.

"I think questions remain about the Australian crop and the dry conditions in the U.S. and China. These weather issues are likely dominating any USDA announcements," said Garry Booth, a trader at MF Global Australia.

Chicago Board of Trade (CBOT) wheat futures for March delivery increased by 0.68 percent to $7.80-3/4 a bushel by 1304 GMT, recovering from a low of $7.66-1/2. After a 1.6 percent decline on Friday, this marked the first weekly loss in three weeks.

Continuous rains in eastern Australia, the fourth-largest wheat exporter globally, raised concerns that up to 60 percent of the wheat harvested might be reallocated for animal feed.

"Although recent developments indicate a slight increase in the availability of higher-quality grain than initially expected, the weather outlook remains a concern for the market," Booth added.

In the U.S., drought has affected some winter-wheat growing areas, while heavy snow impacted parts of the upper Midwest over the weekend, with colder temperatures projected for the week, which might hinder grain movement along the Illinois River, a crucial transport route.

China’s Inflation Policy

In Europe, milling wheat futures displayed mixed results as the market evaluated the USDA’s crop reports along with wider economic news after hitting multiple contract highs last week. January milling wheat saw a slight decline of 0.10 percent to 241.75 euros per tonne, retreating from a contract high of 244.00 euros.

"The market is in a wait-and-see mode," a French broker commented, noting that the USDA report has taken a backseat amid uncertainties regarding China’s potential interest rate increases to combat inflation and discussions on biofuel subsidies in the U.S. Congress.

CBOT March corn rose by 0.87 percent to $5.79-1/4 a bushel, recovering from an earlier low of $5.69, while January soybeans increased by 0.94 percent to $12.85 after declining to $12.57.

Despite a higher estimate from the USDA, the ending stock forecast for corn stands at 832 million bushels—the smallest in 15 years and significantly lower than the stockpile at the start of the year, largely due to record levels of corn-based ethanol production.

Soybean futures also received support from the USDA’s upward revision of U.S. soybean export estimates for the fourth consecutive month, primarily driven by demand from China, despite falling short of some market expectations.

The recent easing of the U.S. dollar against a basket of currencies has made U.S. commodities more appealing to international buyers.

Current Prices (as of 1304 GMT)

• CBOT corn: $5.65 +0.89%
• CBOT soybeans: $12.85 +0.94%
• CBOT rice: $13.99 +0.43%
• Paris wheat: €241.75 -0.10%
• Paris maize: €217.50 +0.12%
• Paris rapeseed: €477.50 +0.79%
• Crude oil: $89.04 +1.42%

(Note: Prices are adjusted for front-month contracts, and CBOT figures are in cents per bushel, except rice, which is in dollars per hundredweight. Paris wheat is expressed in euros per tonne.)