Wheat climbs on threat from dry, chilly weather

Chicago wheat climbed on Tuesday to add to sharp gains a day earlier as the market assessed the risk of yield losses to US crops due to a combination of dry and cold weather. Corn finished stronger and touched a nearly two-month high, with traders digesting news that China is to scrap its stockpiling scheme for the grain, a move that could curb imports.
Soyabeans also gained on technical buying, with many investors looking ahead to Thursday's US planting and stocks estimates from the US Department of Agriculture (USDA).
The most-active May wheat contract on the Chicago Board of Trade rose 5-3/4 cents, or 1 percent, to $4.76-3/4 a bushel, after closing up 1.7 percent on Monday when prices hit a two-week high of $4.77-1/4.
Weather forecasts suggested dry conditions would persist in the southern US Plains, a key zone for hard red winter wheat production, while other areas have seen chilly temperatures.
"Your two things are dryness issues, combined with another shot of cold weather at the end of the week, putting a weather premium back into the market," said Jim McCormick, broker manager at Allendale Inc.
Chilly weather may slow the wheat crop's growth and cause some damage, but is unlikely to kill the crop, McCormick said.
The weather risks have tempered bearish sentiment about large inventories, said Tobin Gorey, director of agricultural strategy at Commonwealth Bank of Australia.
A weekly Commodity Futures Trading Commission report last week showed large speculators expanded net short positions in CBOT wheat to 127,479 contracts in the week ended March 22.
May soyabeans gained 7 cents, or 0.9 percent, to $9.16 a bushel, following strength in soyaoil and palm oil, McCormick said. The most-active May corn futures contract added 2-1/2 cents, or 0.7 percent, to $3.73 a bushel.
China plans to scrap its giant corn stockpiling scheme and allow markets to set prices for the grain, the State Administration of Grain said in a statement.
China imports much less corn than soyabeans but a decline in its overseas buying could be a bearish signal, analysts said.
Traders were also turning their attention toward Thursday's USDA spring planting estimates, which will be released alongside quarterly grain stocks data. Analysts, on average, expected the USDA to report a jump in corn and soyabean seedings over last year, despite three years of falling prices.