CANBERRA: Chicago wheat futures rose on Tuesday, after falling to a two-month low in the previous session as the US dollar strengthened and forecasts for more rain in the dry US Plains improved the outlook for crop production.
Corn and soybean futures also gained as the dollar and oil markets stabilised.
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Prices of both crops had fallen on Monday as dollar strength made US farm goods less competitive and plunging oil prices spilled over to biofuels.
Fundamentals
The most-active wheat contract on the Chicago Board of Trade was up 0.4% at $5.67-1/2 a bushel at 0110 GMT after falling as low as $5.52 on Monday.
CBOT corn rose 0.2% to $4.31 a bushel and soybeans climbed 0.4% to $10.26-3/4 a bushel.
The US dollar was little changed after shooting to a four-month high on Monday amid concern over the economic impact of tariffs promised by US President-elect Donald Trump.
Brent crude rose slightly after falling nearly $5 a barrel over the previous two sessions as China’s latest stimulus plan failed to inspire demand growth.
The Commodity Weather Group on Monday predicted a “notable” increase in moisture for US Midwest and Plains areas that suffered dry conditions in recent months.
Some rain has meanwhile fallen and more showers are forecast in the Black Sea region, the world’s biggest wheat export hub, which has also been dry.
Also weighing on prices are expectations that Trump could bring about a cease-fire between Russia and Ukraine, StoneX analyst Arlan Suderman wrote in a note. This “would allow the wheat market to remove any war premium that may still be in its prices”, he said.
Export prices and shipments from top exporter Russia fell last week because of subdued international demand and new export rules, analysts said.
Longer term, many expect prices to rise. “Black Sea supplies will tighten, leading to continued appreciation of global (wheat) values,” said analysts at Australia’s Rural Bank.
In other crops, CBOT corn rose to a four-month high and soybeans to a one-month high last week after the US Department of Agriculture said US farmers grew less of both crops this year than previously expected.
A rally in soyoil and palm oil prices also supported soybeans, but while Malaysian palm oil futures hit a multi-year high on Monday, CBOT and Dalian soyoil dipped.
Global supply of corn and soybeans remains plentiful and recent rains have improved growing conditions in major exporters Brazil and Argentina.