PARIS/SINGAPORE: Chicago wheat extended gains on Tuesday to a new two-month peak as a sharp decline in US winter wheat conditions kept attention on weather risks to northern hemisphere crops.
Corn and soybeans edged up.
The most-active wheat contract on the Chicago Board of Trade (CBOT) was up 1.4% at $5.95-3/4 bushel by 1103 GMT.
It earlier rose to $6.01-1/2, its highest since Feb. 13, but failed to hold above the psychological $6 threshold.
The US Department of Agriculture’s (USDA) weekly crop progress report showed 50% of US winter wheat crop in good-to-excellent condition, down from 55% a week earlier and 4 percentage points short of the average estimate of analysts polled by Reuters.
EU wheat higher with eyes on Middle East tensions
The deterioration, which traders attributed to dryness in part of the US Plains, added to supply worries after dry weather in southern Russia and a cold spell in western Europe.
“We see an upside for wheat prices as dry weather is threatening Russian and US crops,” said one Singapore-based trader. “Funds are short on wheat and any worries over supplies is going to prompt funds to cover short positions.”
But the US winter wheat rating was still the highest for the time of year since 2020 while large Russian and Ukrainian exports through the Black Sea were keeping international markets well supplied, despite the two countries’ war.
In Europe, May wheat on Euronext edged down 0.7% to 214.00 euros ($227.97) per metric ton after earlier reaching its highest since late January at 219.25 euros.
Traders say grain markets are prone to short-covering bursts given big short positions held by investment funds and that the approaching expiry of May futures has encouraged such moves.
CBOT corn was up 0.1% at $4.50-1/4 a bushel and soybeans added 0.2% to $11.78-1/4 a bushel.
Corn and soy markets were monitoring US spring planting risks, though export competition from Brazil and an easing in crude oil prices were capping prices.
The USDA estimated that 12% of corn had been planted, in-line with analyst estimates, and 8% of soybean, slightly ahead of an average analyst forecast of 7%.
“Energy market prices are soft and the dollar is firm, but our markets have a lot of vulnerable grain and oilseed shorts heading into risky planting weeks,” Peak Trading Research said in a note.