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Wheat jumps as US snowstorm damages crops

US wheat prices jumped 8 per cent in two days as worries over the damage caused by a late winter storm prompted a scramble to cover bearish bets.

More than 30cm of snow that hit western Kansas, southeastern Colorado and western Oklahoma toppled plants just ahead of the winter wheat harvest.

Hard red winter wheat, the high-quality grain that is used to make bread and mainly grown in plains states such as Kansas, was trading at $4.59 a bushel, up 8 per cent from Friday’s close. Soft winter wheat, an ingredient in biscuits and crackers, has jumped more than 7 per cent to $4.48½ a bushel.

The snow damage prompted “massive short covering”, said Matt Ammerman at commodities brokers INTL FCStone. The snowstorm hit at a time when hedge funds and other speculators ratcheted up their bearish bets on wheat on the back of good crop conditions.

“Net short” or bearish positions by speculators in CBOT soft winter wheat were at a record high in the week to April 25, according to data from the US Commodity Futures Trading Commission, making the grain susceptible to a jump in prices caused by short covering in the face of bullish news.

Richard Feltes, vice-president of research at RJ O’Brien, a broker, said “yield prospects are slipping” in the wheat belt.

With further heavy rain forecast for some wheat growing states such as Oklahoma and Kansas over the next few days, many traders will be on high alert.

Nevertheless, the full impact of the adverse weather conditions is unclear and the market will be watching analysis from the Wheat Quality Council Tour in the US this week, said analysts.

“The snow should melt quickly but it will be difficult to precisely measure the damage linked to these climatic conditions until several days,” said Agritel in Paris.

In Europe, wheat traded on Euronext in Paris rose almost 2 per cent. Weather has also been a concern in the region, with low levels of precipitation affecting crop conditions.

The key wheat areas in the north and east of France have been affected by lack of rain and, in its latest weekly crop condition report, FranceAgriMer, the national authority for agriculture and marine products, lowered its rating of wheat considered “good to excellent” from 85 per cent to 78 per cent.

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