Monday, 3 July 2017

U.S. spring wheat set for biggest monthly gain since 2010 on drought

U.S. spring wheat rose for a seventh straight session on Friday, trading near last session’s three-year high as fears of output losses in key growing areas of the United States pushed the market towards its biggest monthly gain since 2010. Spring wheat on the Minneapolis Grain Exchange has is up more than 30 percent this month, its biggest monthly rally since July 2010. This has swept Chicago Board of Trade (CBOT) wheat to a one-year peak, buoying corn and soybeans as well.
The most-active wheat futures on the CBOT added 2.2 percent on Friday to a gain of nearly 5 percent in the previous session to hit $5.07-1/4 a bushel, its highest since June last year. Wheat has so far risen 18 percent in June, the biggest monthly rise in two years. “The market is cutting their high-protein wheat crop forecasts,” said Tobin Gorey, director of agricultural strategy, Commonwealth Bank of Australia. “Many will be sceptical that U.S. winter wheat prices should be this high and rising.
We are approaching the heaviest point of the 2017 winter crop harvest and that is being added to comfortable supply.” Corn is up 3.7 percent this week while soybeans have added more than 1 percent after both markets lost ground last week. For the month, corn and soybeans are little changed. Drought conditions in the northern U.S. Plains worsened in the past week and there are forecasts for more hot and dry weather that could crimp the harvest. The latest weekly U.S. Drought Monitor, released Thursday by a consortium of climatologists, showed “extreme drought” covering 25 percent of North Dakota, by far the top U.S. spring wheat producer, up from about 8 percent a week ago.
As the world struggles with a glut of grain that has filled inventories to record-highs and cast a wet blanket over the corn and soybean markets, the shortage of high-quality spring wheat has taken markets by surprise. The U.S. Department of Agriculture was due to release updated planting figures on Friday. Analysts expect the USDA to lower its U.S. spring wheat planting estimate to 11.2 million acres, from a March forecast of 11.3 million.
Grains prices at 0349 GMT Contract Last Change Pct chg Two-day chg MA 30 RSI
CBOT wheat 506.50 10.50 +2.12% +7.08% 462.88 78
CBOT corn 371.50 2.00 +0.54% +4.13% 372.07 39
CBOT soy 927.00 2.25 +0.24% +0.41% 936.49 44
CBOT rice 11.89 -$0.01 -0.13% +1.28% $11.52 66
WTI crude 45.21 $0.28 +0.62% +1.05% $46.47 57
Currencies Euro/dlr $1.144 $0.000 -0.02% +0.55%
USD/AUD 0.7698 0.002 +0.21% +0.76%
Most active contracts Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight RSI 14, exponential

Source: Reuters (Reporting by Naveen Thukral; Editing by Tom Hogue)