Chicago wheat futures jumped 3% on Tuesday to a new 10-month high before paring gains as the market reacted to reduced harvest projections and shifting rain forecasts for top exporter Russia.
Corn also gained ground, supported by wheat and recent downgrades to forecasts forSouth American production, while soybeans edged lower.
The most-active wheat contract on the Chicago Board of Trade (CBOT) Wv1 was up 1.9% at $7.10-1/2 a bushel by 1111 GMT. It earlier rose to $7.20, a level not seen since late July last year, surpassing a previous 10-month peak struck last week.
After Monday’s closure for the U.S. Memorial Day holiday, Chicago futures initially caught up with a day-earlier rally on Euronext wheat BL2U4, which had set one-year highs. GRA/EU
Dry weather and bitter frosts have hit cropping regions in Russia’s south. Meanwhile, too much rain in Siberia has waterlogged soil there as spring wheat planting gets under way.
Consultancy IKAR on Monday further reduced its estimate for Russian wheat production to 81.5 million metric tons and exports to 44 million tons. Only a month ago, IKAR predicted production of 93 million tons and exports of 52 million tons.
Some 1.5 million hectares of Russian crops have been damaged by frosts, and the total figure may rise to 2 million hectares, Russia’s Grain Union said.
Weather issues have also been creeping into neighbouring Ukraine, where traders union UGA downgraded its forecast for the country’s 2024 combined grain and oilseed harvest.
“Concerns about lower supply from the Black Sea region continue to drive up prices,” Commerzbank said in a note.
However, latest weather charts suggested rain may reach a broader swathe of southern Russia this week than previously expected, encouraging Chicago futures to retreat from its highs and Euronext to open lower.
“It looks like a bit of rain is coming,” a European trader said. “Weather is all that’s making the market move at the moment.”
The European Union’s crop monitoring service on Monday trimmed its outlook for this year’s EU soft wheat and rapeseed yields while upping its forecasts for barley and maize.
In the United States, traders will be watching for a weekly government report after Tuesday’s close to assess the condition of wheat crops and planting progress for corn and soybeans.
CBOT corn Cv1 added 0.8% to $4.68-1/4 a bushel while soybeans Sv1 ticked down 0.2% to $12.45 a bushel.