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Wheat rises on prospects of tepid harvests in southern hemisphere

Chicago wheat futures regained some ground on Thursday as traders looked beyond low price offers in Europe and shifted focus to forecasts of smaller harvests in Australia and Argentina that are likely to tighten supply later in the year.

Corn and soybeans also advanced as an oil price rally lifted ethanol, an alternative fuel that can be made from either crop.

Wheat harvests in Russia and many other northern hemisphere countries are nearing an end and dry weather has hit crops in southern hemisphere exporters that harvest later, said Rod Baker, an analyst at Australian Crop Forecasters in Perth.

“While Ukraine and Russia are getting wheat out, prices will remain here,” he said. “But after that, you’ve got a shrinking crop. This is putting a floor under the market.”

Most-active wheat futures on the Chicago Board of Trade (CBOT) were up 0.4% at $5.81-1/2 a bushel by 0359 GMT.

Prices fell to $5.70 a bushel earlier this month, the lowest since December 2020.

Wheat slipped 1.6% on Wednesday after traders said the lowest free-on-board offer presented at an Egyptian state purchasing tender was for Ukrainian wheat at $239 a metric ton, far below a floor of around $270 a ton that the Russian government is seeking to impose on Russian exports.

Fears persist over Ukraine’s ability to export grain as Russia again attacked its port infrastructure, but several ships have nevertheless successfully navigated a Black Sea route.

Meanwhile, Poland’s agriculture minister said talks to resolve a dispute about a Polish ban on imports of Ukrainian grain were on track.

Ukraine’s agriculture ministry said it is keeping the 2023 grain crop forecast unchanged at 57 million tons.

Traders await a U.S. Department of Agriculture (USDA) weekly export sales report on Thursday, with analysts estimating net wheat sales of 250,000-500,000 tons for the week ended Sept. 21.

Analysts also expect a separate USDA report on Friday to show U.S. all-wheat production of 1.729 billion bushels for 2023-24.

Most-active CBOT corn rose 0.4% to $4.85-1/4 a bushel and soybeans were 0.1% higher at $13.04-1/2 a bushel.

Both crops have been lifted by a 3.5% rise in oil prices since Tuesday’s market close. Crude reached its highest levels since November on Thursday.

Corn and soybeans, however, are amply supplied and the U.S. harvest is underway, bringing more crops to the market.

Spot basis bids for soybeans were steady to lower at most elevator and processor locations across the U.S. Midwest and soy crusher bids have been drifting lower.

South African farmers are expected to harvest 6% more maize in the 2022/2023 season, compared with the previous season, the government said.

Commodity funds were net buyers of CBOT corn, soyoil and soybean futures and net sellers of wheat and soymeal on Wednesday, traders said.
Source: Reuters (Reporting by Peter Hobson; Editing by Sherry Jacob-Phillips)

 

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