CANBERRA: Chicago wheat futures took a breather in early trading on Thursday after surging to 3-1/2-month highs as drought in top producer Russia and a drone attack on a Ukrainian river port fuelled supply concerns.
Corn futures held close to a three-month peak, supported by higher wheat prices and strength in the oil market after an Iranian missile attack on Israel.
Wheat extends rally with weather, war risks in focus
Soybeans edged lower as weather forecasts suggested rain could soon fall in top producer Brazil, where dry conditions have slowed planting.
Fundamentals
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The most-active wheat contract on the Chicago Board of Trade was down 0.3% at $6.13-1/4 a bushel at 0050 GMT after touching $6.17 on Wednesday, the highest since June 14. Prices are up 6% so far this week.
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CBOT corn slipped 0.1% to $4.32-1/4 a bushel having hit $4.34-1/4, its highest since June 28, in the previous session. * Soybeans slipped 0.3% to $10.53-1/4 a bushel.
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All three contracts fell to four-year lows in recent months but have recovered some ground as central banks cut interest rates, the US dollar weakened and adverse weather began to threaten supply.
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Oil prices rose for a third day on Thursday as Israel bombed central Beirut. Higher oil prices can boost demand for biofuel made from crops, and Middle East instability tends to lift wheat, traders say.
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Russia’s Oryol region declared a state of emergency on Wednesday due to drought and the resulting winter crop damage, joining other key grain-producing regions that have done so following adverse weather.
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Winter wheat planting rates are at 11-year lows in Russia, which accounts for as much as a quarter of the global wheat exports, and there is little sign of rain in many cropping areas.
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Harsh conditions in Russia have led to market talk that it could restrict exports later this season. The country’s grain exporters’ union on Wednesday said recent export volumes were excessive and called for a quota mechanism to limit shipments.
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Consultants Sovecon cut their 2024/25 Russian wheat export forecast on Wednesday to 47.6 million metric tons from 48.1 million tons.
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Meanwhile, in Ukraine, another wheat exporter, officials said a Russian drone attack damaged a grain facility near the Danube river border with Romania, a reminder that the war between Russia and Ukraine could disrupt wheat supply.
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Dry weather also threatens upcoming wheat harvests in Argentina and Australia, where frost added to low rainfall to wipe more than a million tons off analysts’ production forecasts.
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Speculators have been reducing their short positions in CBOT wheat and were net buyers again on Wednesday, traders said.
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