US wheat futures surged 2.9% on Tuesday, on track for their biggest gain in two months, as cuts to the harvest outlook in Australia bolstered prospects for US exports, traders said.
The strength in wheat underpinned the corn market but soyabean futures were trading close to unchanged even as China announced a series of new import tariff exemptions on US products including soyabeans.
As of 10:46 a.m. CST (1645 GMT) Chicago Board of Trade March soft red winter wheat was up 15-3/4 cents at $5.58-1/2 a bushel. K.C. hard red winter wheat (HRW) and MGEX spring wheat futures also were sharply higher, with the front-month HRW contact hitting its highest since January 29.
Australia said on Tuesday its 2019/2020 wheat harvest was sharply below expectations as severe drought wilted crops.
With harvesting now complete, Australian agricultural agency ABARES said the crop totalled 15.17 million tonnes - the lowest since 2008.
CBOT March corn futures were up 3-3/4 cents at $3.81-1/2 a bushel.
China said on Tuesday it would grant exemptions on retaliatory import duties imposed on 696 US goods, as Beijing seeks to fulfill commitments made in its interim trade deal with Washington.
Tuesday's announcement comes after the Phase 1 trade deal between the two countries took effect on February 14 and is the third round of tariff exemptions China has offered on US goods.
But traders were waiting for clear signs that China has increased its purchases of US soyabean before pushing prices higher. A US Agriculture Department report on Tuesday morning showed that export inspections of soyabeans totaled 992,294 tonnes in the week ended February 13. That included 203,165 tonnes bound for China, down from 404,420 tonnes a year ago.
CBOT March soyabeans were up 1/4 cent at $8.94 a bushel. Massive harvest expectations for South America also added pressure to soyabeans. Brazil's 2019/20 soyabean crop is expected to reach a record 125.6 million tonnes, consultancy AgRural said on Monday.