CANBERRA: Chicago wheat futures edged higher on Thursday as traders assessed whether rainfall in the US and Russian cropping zones was enough to alleviate dryness that threatens yields.

Soybean and corn futures edged higher, but both contracts, along with wheat, were not far from four-year lows due to a strong supply outlook.

The most-active wheat contract on the Chicago Board of Trade (CBOT) was up 0.2% at $6.00-1/2 a bushel by 0234 GMT, having risen to a four-month high of $6.33 last week.

The rally to last week’s peak was driven partly by investors covering some of their large net short positions and lifted prices higher than was justified, said Andrew Whitelaw, an analyst at Episode 3 in Canberra.

Most analysts still expect a wheat supply surplus this year.

The US Department of Agriculture’s (USDA) crop progress report on Monday showed 49% of the US winter wheat crop was rated in good-to-excellent condition, the highest for this time of year since 2020.

Meanwhile, Russia, the top wheat exporter, continues to ship record quantities after two consecutive large harvests, keeping a lid on prices.

Chicago wheat rises as traders weigh impact of dry weather in US, Russia

Among other crops, CBOT soybeans rose 0.5% to $11.76-1/4 a bushel and corn climbed 0.3% to $4.52 a bushel.

Speculators have also amassed large net shorts in soybeans and corn, meaning they anticipate lower prices.

Commodity funds were net sellers of wheat on Wednesday but buyers of corn and soybeans, traders said.

The US dollar helped prices by weakening on Wednesday after the Federal Reserve left interest rates unchanged, making US farm products more affordable for overseas buyers.

“Increasing supply, diminishing demand and a strengthening dollar are a mix for lower grain prices,” analysts at Bloomberg Intelligence wrote in a report.

“Absent a poor corn belt growing season, there may be little to stop corn and soybeans from reverting toward enduring means/pivots of about $4 and $10 a bushel,” they said.

The US spring planting season is humming along at an above-average clip, though recent and upcoming rains should slow progress during what is typically peak week for corn planting.

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