Wheat futures rise to 2-day high on U.S. crop concerns
Category: Grains
(Forexpros) – Wheat futures regained strength on Wednesday, rising to a two-day high as dry weather across the U.S. Great Plains region and concerns over wheat crop conditions in Europe buoyed prices.
On the Chicago Mercantile Exchange, wheat futures for December delivery traded at USD6.2938 a bushel during European morning trade, climbing 0.67%.
It earlier rose by as much as 0.75% to trade at USD6.3162 a bushel, the highest price since October 17.
Industry weather group Telvent DTN said in a report on Tuesday that major wheat-growing states across the U.S. Midwest and Great Plains will be mostly dry and cool through the end of October.
The adverse weather forecast was likely to weigh further on U.S. winter-wheat crop yields.
The U.S. Department of Agriculture said on Monday that approximately 73% of the winter-wheat crop was planted as of October 17, down from 80% in the same week a year earlier and below the five-year average of 77%.
Nearly 44% of the U.S. winter-wheat crop emerged as of last week, compared to the five-year average of 51% for this time of year.
Agricultural traders pay close attention to the weather forecasts because farmers need favorable conditions to grow large crops to replenish low inventories.
Wheat prices found further support after the USDA reported overnight that the quality of the wheat harvest in Poland was reduced due to “fungi presence after excessive rainfall prior to harvest.”
Poland is the euro zone’s third largest grains producer. Crop losses in Europe could mean increased demand for U.S. supplies, which is the world’s third largest wheat producer and the biggest exporter of the grain.
A broadly weaker U.S. dollar also contributed to gains, as risk appetite was boosted by hopes that European leaders will make a breakthrough on tackling the euro zone’s debt crisis at this weekend’s European Union summit.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.4% to trade at 77.00.
A weaker dollar boosts the appeal of U.S. crops to overseas buyers and makes commodities more attractive as an alternative investment.
Elsewhere on the Chicago Mercantile Exchange, corn for December delivery gained 0.57% to trade at USD6.4788 a bushel, while soybeans for November delivery eased up 0.15% to trade at USD12.5213 a bushel.
