U.S. grains: Wheat near limit-up on yield concerns

Chicago | Reuters — U.S. wheat futures surged on Wednesday, supported by concerns about crop shortfalls in key production areas around the globe, traders said.

The strength in wheat lifted corn futures to their highest in more than three weeks. Corn also received support from concerns about dry conditions limiting harvest yields in parts of the U.S. Midwest.

Soybean futures ended slightly higher, with technical buying pulling prices higher after the market dipped into negative territory.

The most-active Chicago Board of Trade soft red winter wheat contract jumped 6.2 per cent, its biggest daily percentage gain since May 14, 2015. Prices briefly touched their 35-cent daily trading limit, topping out at $5.45-1/4 (all figures US$).

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MGEX spring wheat and K.C. hard red winter wheat futures also posted strong gains.

Consultancy Strategie Grains has again cut its estimate for this year’s EU soft wheat crop, which is now expected to be below 130 million. This would be the lowest soft wheat harvest in the 28-member bloc since 2012, analyst Laurine Simon told Reuters.

In Russia, the world’s top wheat exporter, yields are around a three-year low, according to agriculture consultancy SovEcon.

In the U.S., scouts on an annual tour found below average yield prospects for hard red spring wheat in the southern half of North Dakota and adjacent areas of South Dakota.

“That contrasts with crops ratings and USDA’s July estimate showing much better yields following last year’s drought on the northern Plains,” Farm Futures analyst Bryce Knorr said in a note to clients.

Chicago Board of Trade September soft red winter wheat futures settled up 32-1/2 cents at $5.42-3/4 a bushel.

Analysts Agritel said there were serious concerns about crops “from the Atlantic to Urals,” and although they remain mainly focused so far on Europe and the Black Sea, “this is enough to change the game.”

CBOT September corn futures ended 7-1/4 cents higher at $3.59-1/4 a bushel.

CBOT November soybean futures rose 2-1/2 cents to $8.75-3/4 a bushel.

The soybean market was underpinned by the Trump administration’s plan to provide up to $12 billion in aid to shield farmers from economic pain stemming from trade disputes.

“Farmers could now use the announced funds, for example, to store soybeans rather than sell them off cheaply. This would reduce supply on the market and shore up the price,” Commerzbank said in a market note.

— Mark Weinraub is a Reuters commodities correspondent in Chicago; additional reporting by Naveen Thukral in Singapore and Nigel Hunt in London.

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