U.S. Wheat Futures Rise More Than 3% on Lower Than Expected Supply Forecast and Trade Corridor Doubts

U.S. wheat futures rose more than 3% on Monday, buoyed by official forecasts falling short of expectations for U.S. supply for next season and doubts over the renewal of a trade corridor deal. shipping from Ukraine before the deadline set this week.

Corn and soybean futures also rose, supported by strength in wheat and crude oil, a weaker dollar and concerns over the magnitude of Argentina’s drought-affected crops.

At 12:46 p.m. CDT (1746 GMT), Chicago Board of Trade (CBOT) July Wheat was up 21-1/2 cents at $6.56-1/2 a bushel. The KC July wheat contract, which represents the class of wheat grown in the drought-stricken U.S. plains, was up 21 cents at $8.98 a bushel after hitting $9.12-1/4, its highest level for almost six months.

The corn CBOT contract for July was up 4-3/4 cents at $5.91 a bushel and the soybean contract for July was up 11-1/2 cents at $14.01-1/2 the bushel.

Wheat set the tone on fears of tighter supply after the US Department of Agriculture’s first official forecast for US wheat production for 2023-24, released Friday at 1.659 billion bushels, were lower than most analysts’ expectations. The harvest of hard red winter wheat in the drought-stricken plains would be the lowest since 1957.

The USDA report “was somewhat bullish for wheat prices given the expected sharp decline in US carry-out stocks for 2023/24,” ING Economics said in a note.

“However, developments related to the Black Sea Grains Agreement will also be crucial for the direction of prices.

UN aid official says efforts will continue in coming days to expand deal allowing safe export of Ukrainian grain to Black Sea, a pact Russia has threatened to quit on May 18 due to obstacles to its grain and fertilizer exports.

Gains in corn and soybean futures markets were limited after the USDA on Friday forecast a sharp rise in corn and soybean stocks year-over-year on expectations of record crops in the United States. United States for these two cultures. However, crop prospects will depend on weather conditions in the Midwest over the coming months.

Analysts on average had expected the USDA to announce later in the day Monday that corn planting was 68% complete and soybean planting was 51% complete. (Additional information provided by Gus Trompiz in Paris and Naveen Thukral in Singapore; edits by Emelia Sithole-Matarise and David Gregorio)