Grain traders were awaiting the release of the U.S. Department of Agriculture’s updated weekly crop progress report due out after Monday’s closing bell to gauge how ongoing drought conditions have impacted yields and damaged crops.
On the Chicago Mercantile Exchange, wheat for December delivery traded at USD9.0988 a bushel, gaining 0.5%.
Earlier in the day, the December contract rose by as much as 1.2% to hit a session high of USD9.1738 a bushel, the strongest level since August 23.
Wheat futures have rallied in recent sessions, amid growing fears Russia will implement a limit on grain exports, despite comments last week from Deputy Prime Minister Arkady Dvorkovich saying the country will not curb grain shipments even if its exportable surplus is exhausted.
In 2010, Russia barred grain exports amid a severe drought, prompting global buyers to turn to U.S. supplies.
Russia is a major wheat exporter and competes with the U.S. for business on the global market. A disruption to exports from the country could boost demand for U.S. supplies, which is the world’s third largest wheat producer and biggest exporter.
Mounting fears over dry weather conditions in Western Australia, the largest wheat producing state in Australia, further supported gains.
Meanwhile, corn futures for December delivery traded at USD8.0338 a bushel, adding 0.5%. The December contract rose by as much as 0.9% earlier in the day to hit a session high of USD8.0638 a bushel, the highest since September 4.
Corn prices advanced, tracking wheat prices higher. Wheat and corn prices are linked because both can be used as animal feed.
The USDA will release its weekly crop progress report later in the day. Only 22% of the U.S. corn crop was rated in ‘good’ to excellent’ condition as of last week, below the 52% recorded in the same week a year earlier.
Front-month prices touched an all-time high of USD8.4237 a bushel on August 10, as escalating concerns over the impact of the worst drought in at least 56 years in the U.S. Midwest and Great Plains-region drove prices higher.
Elsewhere, soybeans futures for November delivery traded at USD17.3750 a bushel, shedding 0.2%.
The November contract fell by as much as 0.8% earlier in the session to hit a daily low of USD17.2213 a bushel, which was the weakest since August 28.
Prices came under pressure after updated weather models predicted beneficial rains in the drought-stricken U.S. Midwest crop region later in the week.
The November contract rallied to an all-time high of USD17.8888 a bushel on September 4, as the same hot, dry weather that boosted corn buoyed soy futures as well. Soybeans are grown in many of the same regions across the U.S. as corn.
U.S. soy crop conditions remain at the lowest levels since 1988 for this time of year, according to weekly crop progress data from the USDA.
Global soybean supplies are already on the decline, as severe drought conditions earlier in the year in major South American growers Brazil and Argentina damaged crops in the region.
Corn is the biggest U.S. crop, valued at USD66.7 billion in 2010, followed by soybeans at USD38.9 billion, government figures show. Wheat was fourth at USD13 billion, behind hay.
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