London (Platts)--21Jan2013/118 pm EST/1818 GMT
A persistent and much drier weather pattern in the next three months across the US Southern Plains is "concerning" for winter wheat crops, which are already in historically poor conditions, Deutsche Bank said in a research note Monday. Wheat was the strongest performer in the oilseed and grains complex Friday, accumulating a 5% gain over the week to close at $7.91/bushel on the Chicago Board of Trade. The forward curve for CBOT wheat also points to climbing prices over the course of the year. "The long-discussed subject of the drought is now increasingly unsettling the markets again, as there is still no end in sight to the dry conditions in the key growing areas of the US Great Plains," Commerzbank said in a report Monday. Despite sustained price strength, Deutsche bank said that US wheat exports are still 69% of the US Department of Agriculture's annual estimate compared with an average of 78%. "The market was also disappointed last week that Iraq purchased wheat from Australia and Canada, with the US uncompetitive," Deutsche Bank said. US wheat prices are still trading below the $8.5-9/bushel range held in the months prior to December, when prices fell due to a "more relaxed outlook" for the global harvest, according to Commerzbank. Despite tight wheat stocks, money managers' positioning remained "overwhelmingly" bearish, Commerzbank said. According to the latest data from the US Commodity Futures Trading Commission, net short positions were increased to 23,000 contracts on the week ended January 15 versus the previous week. Corn, wheat and soybean prices are connected as they compete for planted acreage in the US and elsewhere. These three agricultural products are key feedstocks for the production of ethanol and biodiesel globally.--Guilherme Kfouri, guilherme_kfouri@platts.com--Edited by Alisdair Bowles, alisdair_bowles@platts.comSimilar stories appear in Biofuelscan. See more information at http://www.platts.com/Products/biofuelscan