Wheat rises on dry weather concerns, soybeans firm

HAMBURG: Chicago wheat rose on Tuesday, trading close to a three-year high on concerns that dryness in major exporting countries will cut world supplies.

"Wheat is gaining strength because of the continued focus on crop damage in large wheat exporting areas which could eventually move more export business to the United States," said Matt Ammermann, commodity risk manager with INTL FCStone. "Soybeans and corn are underpinned by disappointing US crop condition ratings."

Chicago Board of Trade most-active wheat was up 1.7 percent at $5.84-3/4 a bushel at 1037 GMT, having risen over 3 percent on Monday, and remained close to last week's three-year high of $5.93 a bushel.

Soybeans gained 1.0 percent to $9.02-1/2 a bushel. Corn rose 0.5 percent to $3.87-1/4 a bushel.

"The ongoing hot and dry conditions are prompting repeated downward revisions of crop estimates," Commerzbank said, adding: "Wheat export prices in Russia meanwhile are rising significantly due to crop shortfalls and quality problems."

France's farm ministry on Tuesday reduced its estimate of this year's French soft wheat harvest, underlining the impact of severe weather in Europe.

"The global concerns about wheat crops and quality issues are the focus on wheat," Ammermann said. "I think there is a buying attitude among financial investors on wheat because of world supply concerns."

"The USDA (US Department of Agriculture) world supply and demand report is on Friday and markets will now be watching closely to see what the USDA estimates for the wheat crop in the European Union, I think the market is fearing a large cut in Friday's estimate."

The USDA said on Monday that 67 percent of the US soybean crop is in good to excellent condition, behind market expectations of 69 percent.

It said 71 percent of the corn crop was in good to excellent condition. The USDA also said 74 percent of the US spring wheat crop is in good to excellent condition, below estimates of 77 percent.

"The lower than expected USDA crop conditions for soybeans and corn were rather a surprise," Ammermann said. "August is a key month for US soybean development and given the US weather forecasts leaning to being a little dryer and warmer, August is starting with a little bit of fear about the US soybean.

"But the impact of the US/China trade war remains and without China as a US customer for soybeans it is difficult to be bullish."