Chicago | Reuters — Chicago Board of Trade wheat futures edged higher on Tuesday, after hitting a three-month low, amid short covering and concerns about dry weather threatening production in export hubs including Australia.
Corn futures also rose, while the soybean market eased as traders awaited the start of U.S. harvesting.
After the markets closed, the U.S. downgraded its good-excellent rating for the nation’s soybean crop to 53 per cent from 58 last week. That was below analysts’ expectations for 55 per cent. The corn crop was rated 53 per cent good-excellent, down from 56 a week ago and below analysts’ expectations for 54.
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Crops in Saskatchewan are developing in opposite directions, the province’s latest crop report said. Growing conditions in the province vary, with some areas receiving enough rain while other locations are experiencing crop stress due to hot, dry conditions.
Traders are keeping a close eye on U.S. crops after a hot, dry end to the summer raised concerns about damage.
Dryness in major wheat exporters Australia, Argentina and Canada has also raised doubts about the upcoming availability of global supplies, analysts said.
Australia trimmed its wheat production outlook by 800,000 metric tonnes to 25.4 million and projected output will drop 36 per cent from last year as dry weather curbs yields. Dry weather in September could lead to further reductions, traders said.
“We are in an El Nino, and that’s generally bad for Australia,” said Matt Wiegand, commodity broker for FuturesOne.
The most-active wheat contract ended up 3-3/4 cents at $5.99-1/4 at the CBOT after earlier dropping to its lowest level since May 31 (all figures US$). Corn settled 4-1/2 cents higher at $4.86 a bushel and soybeans were down 4-1/4 cents to $13.65 a bushel.
“Wheat markets still appear relatively relaxed despite the fact that the signs of tightening supply are gradually increasing,” Commerzbank said in a note.
In demand news, the U.S. Department of Agriculture reported exporters sold 251,000 tonnes of U.S. soybeans to unknown destinations, the latest in a string of recent sales.
In Argentina, where drought hurt soy harvests, exports of the oilseed could increase following a government move to allow shippers to use foreign currency income to buy soybeans, market analysts said.
— Reporting for Reuters by Tom Polansek in Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.
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