CANBERRA: Chicago wheat futures rose for a third day on Tuesday as the condition of US crops worsened and a stalemate between the United States and Iran raised the prospect of longer-lasting disruption to fuel and fertilizer supplies.
Corn and soybean futures also inched higher. The most-traded wheat contract on the Chicago Board of Trade (CBOT) was up 1.3percent at USD6.42 a bushel at 0117 GMT, with CBOT corn climbing 0.1percent to USD4.75-1/2 a bushel and soybeans up 0.1percent at USD12.14-3/4. All three contracts have been pushing higher this year, albeit from a relatively low base following a period of plentiful supply. Supporting prices have been a drought in the US wheat belt, strong biofuel demand, and the war in Iran, which has pushed oil and fertiliser prices sharply higher by reducing supply through the Strait of Hormuz. “In the long term, it’s bullish,” said Rabobank analyst Vitor Pistoia of wheat prices.
“We are not going to see any resolution in Hormuz for a while. Supply issues will last for longer, and potentially into the Northern Hemisphere winter seeding period,” he said. The US Department of Agriculture (USDA) on Monday rated 28percent of the US winter wheat crop in good-to-excellent condition, down from 31percent a week earlier and the lowest for this time of year since 2022. Analysts had expected 32percent to be rated “good to excellent”.
Approximately 70percent of the US winter wheat crop is in an area experiencing drought, the government said last week, compared to 22percent a year ago. Planting of US spring crops was, however, running ahead of analysts’ expectations, the USDA said. Oil prices rose for a third consecutive session, with Brent crude around USD105 a barrel after US President Donald Trump said the ceasefire with Iran was “on life support”.
Traders anticipate a busy week. On Tuesday, the USDA will release potentially market-moving global agricultural supply and demand estimates, and a visit by Trump to China between May 14 and 15 could result in Chinese commitments to buy more US farm goods, according to some analysts.