CHICAGO (Reuters) - U.S. wheat futures rallied on Thursday, their third straight day of gains, on worries that adverse weather will lead to crop shortfalls in key growing areas around the world, traders said.
Corn and soybean futures were close to unchanged as traders assessed how forecasts for rain would affect planting in the U.S. Midwest in the coming week.
The grain markets also were monitoring the progress of trade talks between the United States and key export customers China and Mexico.
Chicago Board of Trade soft red winter wheat futures rallied through key technical resistance points after weakness in the overnight trading session brought out some short-covering and bargain buying.
“There’s still plenty of concern over how this winter wheat crop will wind up, despite stronger-than-expected production estimates and rising ratings,” Matt Zeller, director of market information at INTL FCStone said in a note to clients. “Dryness is creeping in to crops for major producers/exporters Australia and Russia, adding to at least a minor bullish story heading to 2018/19.”
Australian farmers are planting wheat in some of the driest soils in years, following on from a severe drought that cut 2017/18 output in the world’s fourth-largest exporter to the lowest in a decade.
At 10:27 a.m. CDT (1527 GMT), CBOT July soft red winter wheat was up 6-3/4 cents at $5.01 a bushel.
“There is some support for the wheat market at current levels because of a drought in the U.S. southern Plains. The USDA is showing some improvement in crop rating but there will be yield losses,” said one India-based agricultural commodities analyst.
CBOT July soybean futures were up 1/2 cent $10.06-1/2 a bushel.
The soybean market is focused on the outcome of trade talks between the United States and China. Chinese demands for U.S. shipments have taken a hit since Beijing proposed import duties last month.
The United States and China launch a second round of trade talks on Thursday to try to avert a damaging tariff war, with the Trump administration demanding a $200 billion cut in China’s U.S. trade surplus and greater protections for intellectual property.
CBOT July corn futures dipped 3/4 cent to $3.98-1/2 a bushel.
Additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore; Editing by David Goodman and Tom Brown