CANBERRA: Chicago wheat futures dipped from three-month highs on Monday, but were supported by concerns over crop production in Europe and escalating tensions between Russia and Ukraine that could impact exports. Corn and soybean futures also fell as the United States geared up for large harvests of both crops.
The most-active wheat contract on the Chicago Board of Trade (CBOT) was down 0.6% at $5.91-1/2 a bushel by 0323 GMT having touched $5.99 on Friday, its highest since June 19.
Wheat has risen around 13% over the last three weeks, helped in part by a weak US dollar that has made US farm goods cheaper for overseas buyers.
“Crop reductions in the EU appear to be the main catalyst for the gains,” said Rod Baker at Australian Crop Forecasters, adding that dry conditions in the Black Sea region are also hindering planting of winter wheat.
An alleged missile attack on a grain vessel in the Black Sea added to doubts about Russian and Ukrainian supply.
Russia is the world’s top wheat exporter and Ukraine a major shipper.
“Europe’s crop could still see another 4-6 million metric tons in reductions going forward - some would say more - while the size and quality of the Russian crop could also see more downward revisions,” StoneX analyst Arlan Suderman wrote in a note.
However, the US Department of Agriculture (USDA) last week raised its estimate for global wheat ending stocks, limiting price gains, analysts said.
“We may see some more downward pressure on wheat prices when that big US corn harvest starts,” Baker said.
CBOT corn slipped 0.7% to $4.10-1/2 a bushel on Monday, while soybeans fell 0.5% to $10.01-1/4 a bushel.
The USDA last week raised its forecast for US corn yields and production, which are expected to be the second largest in history, and trimmed its projection for US soybean production, though the crop remains on track to be the biggest ever.
Speculators last week reduced short positions in CBOT corn, soybean and wheat futures but are still bearish on all three.