US wheat futures rose above $6.00 a bushel for the first time in 13 months on Thursday and extended the rally to 28 percent in July on drought reduced crop prospects in parts of Europe and the Black Sea region. Front-month September wheat on the Chicago Board of Trade settled up 8-1/4 cents at $5.96-1/2 per bushel, after climbing to $6.10, the highest level for a front month on continuous charts since June 2009.
Profit-taking knocked wheat off its highs by the CBOT midsession and turned corn lower, erasing an early rally. Soybeans finished narrowly mixed. US traders said CBOT wheat took cues from the European wheat market in Paris, where benchmark November wheat futures roared to a contract high of 183.50 euros per tonne but pared gains by the close, settling at 178.75 euros.
CBOT September corn fell 3-1/4 cents to finish at $3.76-1/2 per bushel while August soybeans ended up 3/4 cent at $10.16 a bushel. Grain markets remained focused on the Black Sea region, where drought is forcing major exporters - Russia, Ukraine and Kazakhstan - to cut their 2010 forecasts further. As a result, their exportable surplus may shrink.
"European and Russian weather are driving the market," said Glenn Hollander, of Chicago cash grain merchant Hollander & Feuerhaken. "We can talk all we want about some hot and dry (US) weather here longer-term, but the big problems are in the Russian and European grain areas," Hollander said.
Ukraine said it would likely cut its grain exports in the 2010/11 market year to 16 million metric tonnes, from 21.5 million in 2009/10. Farming association DBV said 2010 wheat yields in Germany would drop 10 to 20 percent from last year due to a recent heat wave.
And temperatures in Moscow hit 95 degrees fahrenheit (35 celsius) for the first time since 1981. Russia has experienced higher than average temperatures since late June, affecting central parts of European Russia, the Volga region, southern Urals and Siberia.
A weaker dollar and stronger equity markets also helped support grains, as well as other dollar-denominated commodities including crude oil and gold. The Reuters-Jefferies CRB index, a global commodities benchmark, hit a one-month high as oil and copper prices surged. The dollar fell more than 1 percent against the euro after US housing data and better-than-expected euro zone manufacturing and services data revived appetite for risk.