PARIS/SINGAPORE: Chicago wheat futures hit a new six-week high on Monday on concerns that dry weather in Europe and the Black Sea region will cut production in some of the world’s main exporting countries.
Corn reached a two-week high on strong demand for US supplies, while soybeans also gained more ground although US-China trade dispute kept a lid on the market.
The Chicago Board of Trade most-active wheat contract was 0.6 percent higher at $5.19 a bushel, as of 0951 GMT, having earlier climbed to $5.20-1/2 a bushel, the highest since June 13.
Corn gained 0.5 percent to $3.70-3/4, its highest since July 9.
Soybeans rose 0.2 percent to $8.66-1/4 a bushel.
“Russia, parts of Europe and Australia are contributing less wheat to the world supplies this year,” said Phin Ziebell, an agribusiness economist, at National Australia Bank.
“Russia still has a big crop even though it’s less than last year’s record output.”
Europe’s grain market is bracing for more downgrades to the size of this year’s wheat crop as harvesting reaches the northern regions that have been worst hit by exceptional drought and heat since spring.
Germany, the European Union’s second-largest wheat grower, has been a focus of concern, and comments by the country’s farming association saying it could not forecast the crop because of uncertainty about weather damage have added to market jitters.
And concerns are now rising about the crop in France.
“Until the beginning of the month, the largest EU producer had been seen as the one glimmer of hope in what has long been envisaged as a mediocre EU crop in 2018/19,” Commerzbank said in a note.
Most active December on Paris-based Euronext milling wheat futures rose to a contract high of 195.50 euros.
Consultancy Agritel forecast the French soft wheat crop, excluding durum, at 34.2 million tonnes, more than 6 percent below last year’s crop, just weeks after Strategie Grains stunned grain markets when it cut its French soft wheat production estimate by more than 4 million tonnes to 33.2 million.
For the EU as a whole, Strategie Grains expects production to decrease by 6.6 percent to 132.4 million tonnes.
“This reduces the EU’s chance of profiting to any significant extent from a shortfall in Russian supply, where the crop could plunge by 25 percent as compared with the record-high previous year, according to the Ministry of Agriculture,” Commerzbank also said.
Soybeans have firmed to a near two-week high, but gains are being capped by an escalating US-China trade war.
The United States and China have slapped tariffs on $34 billion of each other’s imports and US President Donald Trump on Friday said he was ready to slap tariffs on all $500 billion of imported Chinese goods.
Large speculators increased their net short position in CBOT corn futures in the week to July 17, regulatory data released on Friday showed.
The Commodity Futures Trading Commission’s weekly commitments of traders report also showed that non-commercial traders, a category that includes hedge funds, increased their net short position in CBOT wheat and increased their net short position in soybeans.