US wheat prices on the Chicago Board of Trade soared more than 6 percent Thursday to their highest level in 13 months, fuelled by crop concerns across Europe, particularly in drought-stricken Russia. CBOT soyabeans and corn followed wheat higher, finding independent support from strong US export sales and worries about hot weather later this month that could threaten yields in the Midwest.
"The weather here is OK now, but everyone wants to talk about the long-range (US) forecasts. That is what the big money is looking at," said Paul Haugens, a vice president with Newedge USA in Chicago. The jitters about global crop weather helped the grain markets to shrug off pressure from outside markets, including a drop in crude oil prices and US equity markets amid weak economic data.
Managed funds were aggressive buyers in grains, snapping up an estimated 17,000 wheat contracts, 20,000 corn and 8,000 soyabeans, two to three times as much as they bought a day earlier. Wheat remained the market's biggest driver as traders fixated on prospects for reduced wheat output in Russia, Europe's leading wheat producer, and in western Europe.
"There is panic buying in European wheat because of the heat wave," Haugens said. French analyst Strategie Grains cut its estimate for the European Union's 2010 soft wheat crop to 129.5 million tonnes, down 3.6 million from last month. At the CBOT, spot September wheat futures settled at $5.96-1/4 per bushel, up 37-1/4 cents or 6.7 percent, the biggest one-day jump in a front-wheat contract in 10 months.
The contract peaked at $5.98-1/2, the highest spot price on a continuous chart since mid-June 2009. In Paris, Euronext milling wheat futures set contract highs. Benchmark November milling wheat rose 6.2 percent, or 10.25 euros, to close at 176.75 euros a tonne.
"We are seeing bearish harvest forecasts almost every day, while forecasts for hot weather into the weekend in Germany are not favourable," one trader in Germany said. Weather was a feature in corn and soyabeans as well. Some private meteorologists expect a high-pressure ridge to bring hot, dry conditions to the US Midwest in late July, which could cut corn and soya yield potential.
AccuWeather.com Agricultural Meteorologist Dale Mohler forecast the hottest temperatures of the year next week in parts of the Midwest. Mohler said that Missouri, Iowa and Illinois would have three to five days with temperatures reaching into the mid- to upper 90s Fahrenheit (35-37 Celsius).
CBOT August soyabean futures settled up 21-1/2 cents at $10.19 per bushel. Strong export demand added support. The US Department of Agriculture said sales of US soyabeans in the latest week totalled 1.225 million tonnes, the biggest tally in nearly seven months. Of the total, China, the world's No 1 soya importer, bought 234,000 tonnes of old-crop US soyabeans and 226,000 tonnes of new-crop.
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