US wheat futures rose more than 2 percent on Wednesday and corn rose over 1 percent as concern about tight supplies intensified after bad crop weather in top exporting nations. Strength in wheat also came from the poor quality of rain-damaged grain in Europe, which forced Germany to buy US spring wheat for the first in three years.
Germany, normally a huge wheat exporter, may have to import one million tonnes of milling wheat in the next year, the country's flour mill association said on Wednesday. Chicago Board of Trade September wheat rose 2.2 percent to $6.67 a bushel by 1211 GMT, after sliding 2.8 percent in the previous session on technical selling.
"A drought in Russia, concern over quality of grain stocks in Germany and even questions about the yield size of the US corn crop continue to underpin the grains market," said Garry Booth, a trader with MF Global Australia. Wheat futures have surged since July as drought in the Black Sea region, too much rain in Canada and a mix of unfavourable weather in European Union countries have forced downgrades of 2010 wheat crop forecasts.
But milling wheat futures in Paris fell in thin trade as the market took a breather after hefty activity over past weeks, traders said. "Buyers are hesitating after all that has already been sold," a French trader said, referring to estimates that a massive 4 million tonnes of French wheat is believed to have already been sold for export in the first two months of the season as buyers switched from weather-hit Russian and German crops.
Paris November milling wheat fell slightly by 0.25 euro to 227.25 euros a tonne to stay near a three-week high and within sight of a contract high of 236 euros on August 5. Traders were also awaiting the outcome of Egypt's tender to buy 55,000 to 60,000 tonnes of hard wheat for shipment in October.
US corn futures, which gained 8 percent in August and touched a new 14-month top this week, have been supported by lower-than-expected yields in the United States amid strong global demand for the grain. CBOT September corn rose 1.5 percent to $4.30 per bushel at 1211 GMT. A Reuters poll of analysts has pegged corn yield at 163.7 bushels per acre, compared with the 165.0 bushels per acre forecast at the beginning of the month by the US Department of Agriculture. The USDA reported high export inspections of US corn in the latest week at 45.265 million bushels, above trade estimates for 33 million to 36 million.
Dry and hot weather in the US Midwest over the weekend favoured early harvest but could have hurt late-filling crops. Wet weather should move into the Midwest this week, especially in west, central and north-east areas. The US soybean crop is also under stress from continued dryness in the US southern and eastern crop belt.
CBOT new-crop November soybeans rose 0.3 percent to $10.11-3/4 a bushel. Soy production in Argentina, the world's No 3 exporter, may dip slightly in the 2010/11 crop year but corn output should be a record, Agriculture Minister Julian Dominguez said on Tuesday. Argentina's farmers will start planting the new season's corn and soy crops over the coming weeks and Dominguez estimated production of the oilseed at 52 million tonnes, slightly below this harvest's 52.7 million tonnes.
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