Torrid weather sets spring wheat up for roaring rally
North American spring wheat prices have extended a dazzling rally as a relentless bout of hot, dry weather scorches fields on the continent.
US department of agriculture data showed a further collapse in spring wheat ratings, which are trading at their worst since 1988. While the variety only accounts for a fraction of world grain output, it adds to weather worries that are driving a rebound in crop prices.
Recent rain in parts of the US farm belt failed to buoy maize ratings. In top wheat shipper Russia, heat and dryness are hampering spring-planted fields, according to Andrey Sizov at consultant SovEcon. And sunny weather is aiding French grain harvests after storms, but may fade later this week.
“The world is not short of wheat overall, but the supply of quality wheat will be low,” the Saskatchewan Wheat Development Commission said in a note. “We continue to be optimistic about spring wheat prices.”
Most active futures for the crop rose an eighth day in Minneapolis, the longest winning streak in three years and nearing their highest since 2012. In Chicago, soft red winter wheat touched a two-month high.
The weather continues to present a grim picture for North
America, especially for spring wheat farmers. Little reprieve is expected for the US growing region, and “significant dryness and stress” will persist for much of the Canadian prairies, according to forecaster Maxar.
Wheat futures have also been spurred by Chinese demand, with the nation’s interest in using the grain for feed “reverberating through the market”, said Tobin Gorey, a strategist at Commonwealth Bank of Australia. Kazakhstan’s plans to restrict some grain shipments provided further support, he added.