February 6th, 2012

Wheat futures gained for the first time in three sessions on speculation that cold weather in France, Germany and Ukraine will damage dormant crops.

Temperatures reached minus 15 degrees Celsius (5 degrees Fahrenheit) in France’s Alsace and Lorraine regions yesterday, according to forecaster Meteo France. In northern Germany, where some fields lack a protective layer of snow, soil temperatures have dropped below minus 8 degrees Celsius, Deutscher Wetterdienst said. Cold weather in the Black Sea region also has hurt crops.

“There’s been a lot of talk about the cold in Europe and in Russia and Ukraine,” Larry Glenn, an analyst at Frontier Ag in Quinter, Kansas, said in a telephone interview. “Traders still remember two years ago when everything was OK, then they had a terrible harvest. They remember how much any loss to production can mean to prices if it comes out of Europe and the Black Sea area.”

Wheat futures for March delivery gained 1.2 percent to close at $6.685 a bushel at 1:15 p.m. on the Chicago Board of Trade. The price, down 2 percent in the previous two sessions, has dropped 22 percent in the past 12 months.

Ukraine, the biggest grain grower in the Black Sea region after Russia, will need to replant at least half of its winter crops after freezing weather this week, Tetiana Adamenko, the head of agro-meteorology at the country’s national weather center, said on Feb. 3.

Damage known as winter kill caused by freezing weather will probably be average as snow cover protected some plants in parts of Bulgaria, where temperatures fell below minus 30 degrees Celsius, FCStone said in a report today.

The outlook for European soft wheat remains positive, and “there is little reason to believe that from a European perspective it will be greater than seasonal averages,” said Jaime Nolan-Miralles, an FCStone risk analyst.

- Tony C. Dreibus in London at Bloomberg.