Chicago wheat futures climbed on Thursday, trading close to a 10-month high hit in the previous session, as expectations of lower wheat production in top exporter Russia continued to buoy the market.
The most-active wheat contract on the Chicago Board of Trade (CBOT) was up 0.2% at $6.94-1/2 a bushel, as of 0229 GMT, having reached its highest level since last July at $7.16-3/4 a bushel on Wednesday.
Corn futures also rose, tracking the strong performance in wheat prices, while soybean prices slid.
According to a Australia-based trader, the uncertainties around Russian wheat output and export potential are driving the wheat market higher. Russia’s IKAR agricultural consultancy has cut its forecasts for Russia’s wheat harvest and exports due to the impact of unusually hot spring weather and bitter frosts.
IKAR has reduced its Russian wheat crop forecast to 83.5 million metric tons from 86 million tons and lowered the projection for the country’s exports to 45 million tons from 47 million tons.
Traders are also monitoring the situation in Ukraine, where crops have faced dryness and frosts, though a state weather forecaster said the frosts had not significantly damaged crops.
In addition, drought in two key Brazilian corn-growing states is reducing the potential size of the country’s second corn crop, according to Agroconsult, an agribusiness consultancy.
The rise in wheat prices has also stoked demand for cheaper alternatives, such as corn, which could help whittle down large global corn supplies. However, faster-than-expected planting progress in the U.S. is keeping a lid on corn and soybean prices.
Commodity funds were net buyers of CBOT corn and soybean, soymeal and soyoil futures on Wednesday, but net sellers of wheat futures, according to traders.