Prices stay firm on weather risks to crops

PARIS/SINGAPORE: Chicago grain futures extended gains on Wednesday to their highest in about a week as lower-than-expected crop ratings for US corn and soybeans and deteriorating prospects for European wheat harvests kept attention on weather risks.

A rising dollar, buoyed by comments from the US Federal Reserve's chief about a strong US economy, and ongoing uncertainty about the impact of a trade dispute with China limited gains, however.

The most active wheat contract on the Chicago Board Of Trade was up 1.1 percent at $5.03 a bushel by 1111 GMT, adding to Tuesday's 1.9 percent gain.

It earlier reached $5.05, the highest since July 10.

Underscoring the impact of parched conditions in northern Europe, Germany's farming association DBV sharply cut its forecast for this year's winter barley and said it was unable to estimate the size of the wheat crop.

Weather woes in European Union countries have coincided with declining harvest prospects in Russia, the world's largest wheat exporter, and have offset an improving US wheat crop outlook.

"Operators are gradually integrating the wheat situation outside the US with an expected tightening of production," consultancy Agritel said in a note.

This could boost US wheat exports in 2018/19 given relatively large inventories, analysts say.

CBOT soybeans added 0.6 percent to $8.60-3/4 a bushel, with the contract trading at its highest in a week as it recovered from a near 10-year low on Monday.

Corn was up 0.8 percent at $3.62-1/2 a bushel, its highest in almost a week at $3.62-1/2.

The US Department of Agriculture said on Monday that 69 percent of the soybean crop and 72 percent of corn were in good to excellent condition. That was down from 71 percent and 75 percent respectively a week earlier.

The lower than expected scores raised doubts about what have been generally favourable growing conditions so far in the US Midwest.

US corn is going through the crucial pollination period, while August will be a critical month for soybean yields.

Soybean prices had been pushed lower recently by fair crop conditions and expectations that Chinese retaliatory tariffs would erode US exports to the benefit of Brazil.

"The decline in US prices since late May offsets the attractiveness of the Brazilian origin," Agritel said.

Brazilian soybean prices have been boosted by Chinese demand as well as rising local transport costs linked to a truck strike. Logistical problems could curb fertiliser deliveries and lead Brazilian farmers to cut back on soybean planting for the next crop, according to analysts.