U.S. grains: Minneapolis wheat surges on northern Plains dryness

Chicago | Reuters — U.S. spring wheat futures set a 5-1/2-month high on Friday, buoyed by expanding dryness in the northern Plains production belt, analysts said.

Minneapolis Grain Exchange July spring wheat settled up five cents at $5.83-3/4 per bushel after reaching $5.90, the highest spot price since mid-January (all figures US$). The spot contract has not traded above $5.90 since July 2015.

Chicago Board of Trade wheat settled mixed, with nearby contracts lifted by strength in spring wheat. CBOT soybeans rose on bargain buying after new lows set this week, and corn followed the firm trend.

Minneapolis spring wheat climbed as forecasts called for warm and dry weather in the northern U.S. Plains next week, potentially stressing newly planted spring wheat, even as excessive rains have swamped fields in the southern Plains and the Midwest.

The weekly U.S. Drought Monitor, prepared by a consortium of climatologists, showed 24 per cent of North Dakota was in “moderate drought” by May 30, up from six per cent a week earlier. North Dakota is by far the top U.S. spring wheat producer.

The Drought Monitor “certainly lit a fire under the Minneapolis market,” said Terry Reilly, senior commodity analyst with Futures International in Chicago. “It is concerning,” he said, “especially after the initial spring wheat ratings came in so low.”

The U.S. Department of Agriculture this week rated 62 per cent of the U.S. spring wheat crop as good to excellent, down significantly from 79 per cent a year earlier.

CBOT soybeans rose on export demand and technical buying after the spot contract this week fell to $9.09-1/2 a bushel, its lowest level in a year.

Weekly USDA export sales data for soybeans came in above trade expectations, and the government through its daily reporting system said private exporters sold 200,000 tonnes of U.S. soybeans to Spain, which has struggled with drought.

“That soybean sale to Spain is a sobering reminder that the drought is really affecting their supply. They are covering themselves in anticipation of a shortfall,” Reilly said.

Still, CBOT July soybeans ended the week down 5-1/4 cents or 0.6 per cent. July corn fell 1-1/2 cents or 0.4 per cent for the week and July wheat lost 8-3/4 cents a bushel or about two per cent.

CBOT corn firmed Friday on spillover strength from soybeans and short-covering ahead of the weekend.

Additional support stemmed from a weaker dollar, which in theory makes U.S. grains more attractive to those holding other currencies. The U.S. dollar index fell after a weaker-than-expected jobs report.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago. Additional reporting for Reuters by Nigel Hunt in London and Naveen Thukral in Singapore.

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