GRAINS-WHEAT RISES FOR SECOND DAY ON SURPRISE FRENCH FORECAST CUT

(Reuters) – Chicago wheat rose for a second day on Monday as a widely followed analyst’s steep cut to France’s harvest outlook fueled concerns about weather risks to global production.

Corn was almost unchanged, holding onto Friday’s gains as investors assessed hot weather in the U.S. Midwest as crops enter a crucial development month.

Soybeans rose slightly after a two-session drop linked to trade tensions
between the United States and China.

The most-active wheat contract on the Chicago Board Of Trade rose 1.1
percent to $5.06-3/4 a bushel by 1101 GMT, having closed up 3.7 percent on Friday.

On Paris-based Euronext, December milling wheat also extended
Friday’s gains, adding as much as 4 euros to hit a more than two-week high of 185.75 euros.

Analyst firm Strategie Grains sparked Friday’s rally when it cut its French soft wheat production estimate by more than 4 million tonnes to 33.2 million in an update to clients.

Confirming the estimate, it said on Monday that a field tour had shown
problems with crop density and grain development, thought to be linked to heavy rain in winter and late spring.

“Previously France had been seen as one ray of hope in what otherwise looks set to be a fairly mediocre EU crop in 2018/19,” Commerzbank analysts said in a note.

The French forecast cut rattled market participants as it came on top of
deteriorating prospects in Germany, the European Union’s second-largest wheat producer behind France, and adverse weather in other major wheat growing countries, including top exporter Russia.

Crop observers have until now anticipated a decent sized French crop close to or above last year’s volume, despite some rain-related disease risks.

CBOT corn inched down 0.1 percent to $3.70-3/4 a bushel and soybeans
were up 0.2 percent at $8.81-1/2 a bushel.

Hotter-than-normal temperatures will persist in the U.S. Midwest through the first week of July, according to agricultural meteorologists.

Corn plants are highly sensitive to stressful heat and dryness in July, when the crop goes through the key stage of development called pollination, although recent rain could mitigate the effects of the forecast heat.

An escalating U.S.-China trade spat continues to hang over the soybean
market, in which China is the leading importer. Beijing has said it will impose an extra 25 percent import duty on more than 500 U.S. goods, including soybeans, on July 6.

U.S. Department of Agriculture (USDA) crop reports showed U.S. farmers planted more corn and soybeans than previously thought and had larger stocks of the crops in storage as of June 1 than they did a year earlier.