CANBERRA: Chicago wheat futures rose on Monday as concerns over production in the United States and France triggered short-covering, lifting prices from last week’s four-month low.
Soybean and corn futures also gained but both remained near four-year lows as favourable crop weather in the US Midwest supports expectations of plentiful harvests.
The most-active wheat contract on the Chicago Board of Trade (CBOT) was up 1.2% at $5.49 a bushel by 0515 GMT after falling to $5.25 on July 16.
CBOT soybeans rose 1.6% to $10.52-1/2 a bushel, close to last week’s low of $10.32, and corn gained 1.1% to $4.09-1/4 a bushel, near last month’s low of $4.
Plentiful supply has seen speculators build large net short positions in all three contracts, leaving them vulnerable to short-covering.
“The wheat market got sold too hard and is recovering some of that sell-off,” said Ole Houe at IKON Commodities in Sydney, pointing to uncertainty about production in Europe and Russia as the trigger for the price bounce.
The condition of French soft wheat crops fell sharply last week to an eight-year low, with harvesting well behind the usual pace, data from farm office FranceAgriMer showed.
Some 12% of the US spring wheat crop was located in a drought area as of July 16, up from 7% the prior week, the US Department of Agriculture said last week.
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Consultancy IKAR cut its forecast for Russia’s 2024 grain harvest to 128 million metric tons from 129.5 million tons, though it kept its export forecast for wheat at 44 million tons after increasing its wheat harvest forecast to 83.2 million tons.
Soybeans are most at risk of further falls, IKON Commodities’ Houe said, pointing to ample supply and the threat of barriers to US exports if Donald Trump wins the presidency and renews a trade war with China.
Speculators’ net shorts in Chicago soybeans expanded to a record high this month amid strong US harvest prospects and an oversupply of beans in China.
Corn should hold above $4 until harvest time around September, when new supply could push prices lower, Houe said.