U.S. wheat futures edged higher Tuesday as the U.S. Department of Agriculture said production in a key-growing region was hit by adverse weather last week just as corn edged higher, extending gains into a second session. Soybeans also firmed despite fears about potential curbs in Chinese demand for U.S. supplies.
The most active wheat futures on the Chicago Board Of Trade were up 0.4 percent at $4.92-1/2 a bushel by 0426 GMT having closed up 0.3 percent on Monday.
Analysts said wheat was drawing support from confirmation of further damage to crops across a major producing region.
“Winterkill due to a lack of snow cover and a lack of moisture has damaged crops again. This is supportive to prices,” said Angus Thornton, an analyst at Profarmer.
The U.S. Department of Agriculture after the close of trading on Monday rated 12 percent of the Kansas winter wheat crop in good to excellent condition, down from 13 percent a week earlier.
The USDA rated 53 percent of the Kansas crop as poor to very poor, up from 50 percent the previous week.
Since wheat deterioration was not 100 percent, rating for the Oklahoma crop added 1 point to 7 percent, while that in Texas gained 3 points to 13 percent.
The ratings were however still historically weak.
There was less worry that prices seem to have got ahead of themselves from a technical perspective, with Benson Quinn Commodities reporting that “soybeans, soymeal and the winter wheat markets have all corrected overbought conditions”.
Meanwhile, evidence of end users buying even after the recent wheat price rally, with Algeria, Ethiopia and Jordan all in the market keep surfacing, although Iraq has shelved purchase plans citing the higher values.
Thinking of Algeria, Agitel said that “French origins should meet this demand as Argentinian origins have lost some competitiveness”.
That said, as for Russian values, something of a benchmark, “for the first time since mid-December, FOB wheat Russian prices have dropped during last week,” Agritel said.
“Indeed, prices recorded in deep water ports like Novorossiysk slipped by -$2 a tonne to $208 a tonne.”
SovEcon also pegged Russian Black Sea export prices at $208 a tonne, although that was a drop of $1.50 a tonne on its data.
Ikar also pegged the price at $208 a tonne, which on its estimates was a $1-a-tonne gain week on week.
Agritel added that wheat prices on Russia’s domestic market “were gaining some ground, especially in the centre region where exporters are sourcing their supplies as cereals availabilities in south oblasts are now reduced”.