U.S. grains: Spring wheat sets three-year top on weather woes

Chicago | Reuters — U.S. spring wheat futures charged to a three-year high on Thursday, fueled by fears that continued dry conditions in the northern U.S. Plains would cut supply of high-protein milling wheat.

The surge in spring wheat futures on the Minneapolis Grain Exchange (MGEX) also lifted Chicago Board of Trade wheat to a one-year peak and buoyed corn and soybeans as well.

CBOT July wheat settled up 23 cents at $4.80-1/4 per bushel after reaching $4.83-3/4, the highest spot price in a year (all figures US$).

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CBOT July corn ended up three cents at $3.59-3/4 a bushel and July soybeans rose 1-1/2 cents to $9.15-1/2 a bushel.

MGEX July spring wheat settled up 36-1/2 cents at $7.41-1/4 a bushel after reaching $7.59-3/4, the highest spot price since May 2014. The September contract briefly traded up its 60-cent daily limit to $7.68 before paring gains.

“(Minneapolis) wheat took off higher today on week-over-week expansion in drought conditions across the northern Great Plains, smaller spring wheat area for Canada, and good high-protein USDA export sales data,” said Terry Reilly, senior commodity analyst for Futures International.

Statistics Canada estimated Canada’s 2017 all-wheat seedings at 22.4 million acres, down from 23.2 million in 2016 and below an average of trade estimates for 22.7 million. The agency said Canadian farmers planted 15.8 million acres of spring wheat, down from its April planting intentions figure of 16.7 million.

The U.S. Department of Agriculture was scheduled to release updated U.S. plantings figures on Friday. Analysts expect USDA to lower its U.S. spring wheat plantings estimate to 11.2 million acres, from its March forecast of 11.3 million.

The latest weekly U.S. Drought Monitor, released Thursday by a consortium of climatologists, showed “extreme drought” covering 25 per cent of North Dakota, by far the top U.S. spring wheat producer, up from about eight per cent a week ago.

Forecasts looked dire. “I really do not see much rain at all coming up over the next seven days. Conditions are going to be deteriorating once again across that area,” said Kyle Tapley, a meteorologist with MDA Weather Services.

CBOT corn and soybeans firmed with spillover support from wheat and weakness in the dollar countering benign weather conditions in much of the U.S. Midwest.

Traders were squaring positions before Friday’s USDA acreage and quarterly stocks reports, which have a history of triggering sharp price movements.

— Julie Ingwersen is a commodities correspondent for Reuters in Chicago; additional reporting for Reuters by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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