Wheat set for fourth weekly gain on Russia dryness, while corn eases

07 Jun, 2019

Corn and soybeans are facing weekly losses after rallying for the last three weeks with farmers in the United States expected to get a window of dry weather to seed crops.

The most-active wheat contract on the Chicago Board Of Trade  was up 0.3% for the week, having added 19% in four weeks.

Corn was down 2% so far this week and soybeans have dropped 1.3% this week, with both set for their first weekly slide in a month.

"Weather reports continue to keep prices of grains and oilseeds on tenterhooks," Commerzbank said in a note. "Parts of Russia are now also too dry, which could prompt downward revisions of the wheat crop forecasts."

The market is supported by fears of production losses in Australia amid dry weather.

"Ukraine does not need much rain now but there is some dry weather is parts of Russia," said one Singapore-based grains trader. "This could have some impact on yields."

Russia is expected to produce a bumper crop of 77 million tonnes in the year to June 2020, the US Department of Agriculture (USDA) estimates, up from 71.7 million tonnes a year ago. Yields, however, could decline if the dryness persists.

Markets are also watching how the winter wheat crop in the southern US Plains and Midwest coped with recent wet weather.

Corn and soybean futures are facing pressure as the weather outlook across the US Midwest continues to show a slightly wider-than-expected window for farmers to plant crops.

The USDA reported export sales of US soybeans in the week ended May 30 at 583,700 tonnes (old and new crop years combined), in line with trade expectations.

The USDA said sales of US corn fell far below trade expectations. In the week ended May 30, US exporters sold 14,800 tonnes, including net cancellations of 8,700 tonnes of old-crop corn and net sales of 23,500 tonnes of new-crop corn.

The US market is concerned about trade tensions with Mexico, a top buyer of US corn.

Commodity funds were net sellers of CBOT soybeans and net buyers of corn, soyoil and wheat futures contracts on Thursday, traders said.

Copyright Reuters, 2019

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