Wheat Prices Soar to Five-Month High on Crop Concerns

Wheat futures rose Monday as cold weather descends around the world, prompting concerns over the health of global grain crops.

Corn and soybean prices fell.

Wheat prices jumped to a more than five-month high as wintry weather continues to threaten crops in the U.S. and abroad. Analysts said cold temperatures in the middle of the week could damage winter wheat crops in Russia and eastern Ukraine that have little snow cover, while an early cold snap in November has also imperiled the U.S. wheat crop.

“There’s winter weather moving in,” said Shawn McCambridge, senior grains analysts at brokerage Jefferies, noting that while it can be difficult to assess weather-induced production losses before spring, the mix of cold temperatures and scant snow cover has previously resulted in reduced output of the grain. “It’s a legitimate threat.”

Less-than-stellar wheat production in Argentina and a shortage of milling quality wheat in Brazil this year also buoyed prices, analysts said, by fueling expectations that U.S. wheat exports could pick up in coming months.

Wheat futures for December delivery on the Chicago Board of Trade advanced 10 3/4 cents, or 1.9%, to $5.88 a bushel after earlier hitting $5.90 1/2, the highest intraday price since Jun. 23.

Meanwhile, corn prices fell amid concerns that lower crude oil and gasoline prices could reduce demand for ethanol, a corn-based fuel additive.

Corn prices extended losses in the wake of last week’s announcement by the Organization of the Petroleum Exporting Countries that it wouldn’t limit crude oil production, which weighed on oil prices. Analysts said lower prices for crude oil will make gasoline cheaper, capping incentive for refineries to blend ethanol—which accounts for roughly one-third of domestic corn supplies—into gasoline and weakening demand for the grain.

Slackening ethanol demand could result in growing U.S. stockpiles of the biofuel, which would be unfriendly for corn prices, said Mr. McCambridge.

“If we see demand fall off, we could build stocks very quickly,” with a potentially long-term impact on corn prices, he said.

CBOT December corn slipped 4 1/2 cents, or 1.2%, to $3.71 1/4 a bushel.