Wheat extends rally with weather, war risks in focus

PARIS/CANBERRA: Chicago wheat rose further on Wednesday to set a new 3-1/2-month high as concern grew about drought in Russia while a drone attack on a Ukrainian river port kept attention on war risks.

Corn prices also extended gains to a fresh three-month peak, supported by the wheat rally and a sharp rise in oil prices after an Iranian missile attack on Israel.

Soybeans were little changed, with spill-over from oil prices countered by US harvest progress and forecasts of widespread rain in Brazil next week that could ease drought and aid soybean planting.

The most-active wheat contract on the Chicago Board of Trade (CBOT) was up 1.1% at $6.05-3/4 a bushel at 1104 GMT, after touching $6.10, the highest since June 16.

Russia’s weather forecast agency said on Wednesday that conditions for winter crops in some key producing regions were “worse than usual” in October due to a lack of precipitation.

That came after Russia’s Voronezh declared a drought emergency for farmers on Tuesday.

“Climate fears in major producing countries as well as renewed geopolitical tensions in the Middle East supported prices,” Argus analysts said in a note.

“Wheat has risen the most against the backdrop of worsening drought on plantings in Russia.” While a western swathe of the Black Sea zone has received significant rainfall, much of Russia’s winter wheat belt has stayed dry.

The poor start to sowing has fuelled talk that Russia may restrict its exports later this season after heavy volumes shipped in recent months.

In the southern hemisphere, analysts have downgraded expectations for Australia’s upcoming harvest by well over a million tons due to lack of rainfall and widespread frost.

A Russian drone attack damaged a grain facility in Ukraine near its Danube river border with Romania, Ukrainian officials said.

That put attention back on risks to Black Sea trade from Russia’s conflict with Ukraine.

CBOT corn rose 0.9% to $4.32-3/4 a bushel after hitting $4.34-1/2, its highest since June 27. Soybeans eased 0.3% to $10.54 a bushel.