Chicago | Reuters — Chicago wheat futures rose about 1.5 per cent Tuesday and Minneapolis spring wheat traded above US$6 a bushel for the first time in nearly two years on deteriorating spring wheat ratings amid hot and dry weather in the northern U.S. Plains, analysts said.
Corn futures neared a three-month high and soybeans followed the firm trend.
Chicago Board of Trade July wheat settled up 6-1/4 cents at $4.35-3/4 per bushel (all figures US$). MGEX July spring wheat ended up 9-3/4 cents at $5.98-3/4 a bushel after reaching $6.04, the highest spot price on a continuous chart since July 2015.
CBOT July corn settled up 4-1/4 cents at $3.77-1/4 a bushel after touching $3.79-3/4, its highest since March 9. July soybeans finished up 1-1/2 cents at $9.23-1/2 a bushel.
CBOT wheat followed strength in MGEX spring wheat. The U.S. Department of Agriculture late Monday rated 55 per cent of the U.S. spring wheat crop in good to excellent condition, down from 62 per cent a week earlier and 79 per cent a year ago.
“Spring wheat regions either side of the U.S. and Canada border are drying rapidly to the detriment of young crops,” said Tobin Gorey, director of agricultural strategy at Commonwealth Bank of Australia.
Spring wheat is a high-protein variety prized by millers for its quality. Concerns about the crop come at a time when traders are anxious about tightening supplies of high-protein wheat.
“The world is awash with wheat, but most of that is lower protein that needs higher protein wheat to blend with it,” INTL FCStone chief commodities analyst Arlan Suderman wrote in a note.
Corn futures rose on fears that stressful weather in the Plains could spread into the Midwest. Also, commodity funds hold large net short positions in corn, soybeans and wheat, leaving the markets vulnerable to bouts of short-covering.
Forecasts called for hot weather this weekend in the Corn Belt, where the crop is still a few weeks from its key pollination phase.
“If we get into a situation where we get the heat but we don’t get the rain, that’s how this thing gets friendly, really fast,” said Joe Vaclavik, president of Standard Grain, a Chicago brokerage.
“It’s not a full-blown weather scare, but it’s the market building in a little risk premium,” Vaclavik said.
Corn ratings improved last week. USDA rated 68 per cent of the U.S. crop as good to excellent, up from 65 per cent a week earlier.
— Julie Ingwersen is a commodities correspondent for Reuters in Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Gus Trompiz in Paris.