Chicago | Reuters — Chicago wheat futures rallied to five-year highs on Thursday, as cuts to Argentina’s wheat outlook brought into focus the potential global supply damage possible due to dryness in top wheat producing countries, trader said.
Corn followed wheat, climbing to 14-month highs and soybeans ended higher as exports continue.
The most-active wheat contract on the Chicago Board of Trade added 21-1/2 cents to $6.18-1/4 per bushel, the highest since Dec. 29, 2014 (all figures US$).
CBOT corn ended 6-1/4 cents higher at $4.03-3/4 per bushel after reaching $4.04-1/4, its highest since Aug. 12, 2019 and soybeans rose six cents to $10.62-1/4 per bushel.
Argentina’s Rosario grains exchange lowered its estimate of the South American country’s soon-to-be-harvested 2020-21 wheat crop to 17 million tonnes, from 18 million previously, citing dryness and frosts.
“The weather became that much more important, because of the Argentine cut,” said Mike Zuzolo, president of Global Commodity Analytics. “We’ve gotta ration demand now, because we don’t know how bad supply is going to get hit, globally, when we go into dormancy.”
Dryness across Russia’s wheat-producing regions added to emergence concerns in the drought-stricken U.S. Plains, lifting CBOT wheat futures.
“If they get a rain it may come up, but I’ve been talking to clients that say, it’s too far along,” said Jeff French, risk management specialist with Top Third Ag Marketing. “There’s just no relief in sight.”
Meanwhile, China’s Dalian corn futures market rose to six-year highs on Wednesday, creating hope that the country will renew purchases of U.S. corn.
“China can import corn and make a profit,” said Don Roose, president of U.S. Commodities, noting the country would need to lift tariffs first.
Soybeans were supported by export demand from China, despite pressure from rains in South America that improved conditions for newly planted crops.
“They’re kind of canceling each other out, with a bias to the upside,” said Roose.
USDA reported another 261,000 tonnes of U.S. soybean sales to China Thursday morning.
— Reporting for Reuters by Christopher Walljasper; additional reporting by Naveen Thukral and Maytaal Angel.