CHICAGO: US wheat futures set two-month highs on Thursday as the Department of Agriculture slashed its production forecasts for the variety that is grown in the Plains and used to make bread.
The USDA, in a monthly crop report, estimated hard red winter wheat output at 590 million bushels, down from 749 million in April and below analysts’ estimates for 685 million.
Hot weather has stressed the crop, with drought affecting about 69% of US winter wheat areas as of May 3, according to separate government data.
“Out of all of the numbers, the most important was the HRW production number, based on a survey, and that was indisputably bullish,” said Charlie Sernatinger, analyst with ED&F Man Capital.
Chicago Board of Trade July soft red winter wheat climbed 33 cents to $11.46 a bushel as of 12:15 p.m. CDT (1715 GMT) and reached its highest price since March 9. K.C. July hard red winter (HRW) wheat jumped 41 cents to $12.41-1/2 a bushel and set its highest price since March 8. MGEX July spring wheat reached a contract high and was up 32-1/4 cents at $12.88-1/4 a bushel.
Global grain supplies have tightened due crop shortfalls and Russia’s invasion of Ukraine, a major supplier of wheat and corn. The monthly USDA report projected Ukraine will export 10 million tonnes of wheat in 2022/23, down from 19 million in 2021/22.
The USDA surprised grain traders by lowering the government’s estimate for US corn yields to 177 bushels per acre, down 4 bushels from a February estimate. Cold weather delayed springtime plantings in the Midwest.
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