Wheat futures climbed for a third day to the strongest level in more than a week on signs of lower winter crop yields in parts of the U.S. and as Russia’s production may come in smaller than thought.
Drought conditions are limiting yield potential in southwestern and west-central Kansas, Aaron Harries, vice president of research and operations at trade group Kansas Wheat, said on the second day of a virtual crop tour. Russia expects its grains harvest to be slightly smaller than last year after weather hurt crops.
Soybean and corn futures retreated amid concerns that increasing tensions between the U.S. and China could jeopardize sales of farm products under the phase one trade deal. President Donald Trump escalated his rhetoric on Wednesday, suggesting China’s leader, Xi Jinping, is behind a “disinformation and propaganda attack on the United States and Europe.”
After a bearish May U.S. Department of Agriculture supply and demand report, it’s more likely that corn, soybeans and wheat will remain in a low range for the rest of the second quarter, without a weather event, Citigroup Inc. said.
Still, as oil rebounds and transport fuel demand ticks up, “we could see a mild recovery and modest short-covering in 3Q,” which may boost average prices to $3.35 a bushel for corn, $8.50 for soybeans, and $5.25 for wheat, it said.
(Bloomberg)