Wheat hits 3-week high on crop concerns

Dow Jones Newswires01/18/2013 @ 4:12pm

U.S. wheat futures rallied to a three-week high Friday, driven by crop production worries for the winter wheat crop.

The March contract ended up 10 cents, or 1.3% at $7.91 1/4 a bushel at CBOT. Kansas City Board of Trade March wheat rose 6 3/4 cents, or 0.8%, to $8.43 3/4 a bushel.

Traders are concerned about threats to U.S. wheat production. Intense drought conditions in the southern Plains could prevent normal development of hard, red winter wheat crops there.

Worries about weather are keeping a near-term uptrend in prices in place.

People are a little excited about wheat, as wheat crops in the Great Plains face poor growing weather, said Tim Hannagan, grain specialist with brokerage Alpari LLC in Chicago.

"There is definitely a weather threat there," he said.

The market is adding some weather-related risk premium to prices ahead of a long weekend. CBOT markets will be closed Monday in observance of the Martin Luther King Jr. holiday.

The National Weather Service has a dry forecast for the southern plains for the next five days. It also forecasts below-average chances of precipitation in the region in the six-to-10-day period and in most of the region in the eight-to-14-day period.

The dormant wheat crops lack snow cover to protect plants from an arctic blast heading toward the region next week, Mr. Hannagan said. Crops still have not gotten the needed moisture to offset the stress from a drought that continues to blanket the region, he added.