Chicago | Reuters — U.S. wheat futures rose more than one per cent on Wednesday as signs of a hardening conflict between Ukraine and Russia and worries about dryness in China appeared to spark a round of short-covering, analysts said.
Corn and soybean futures also moved higher on bargain buying after the benchmark Chicago Board of Trade corn contract hit a multi-month low and soybeans touched a seven-week low earlier this week.
A setback in the dollar lent support, in theory making U.S. grains more attractive to those holding other currencies.
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CBOT July wheat was up 7-1/4 cents at $5.42 per bushel. July corn was up 1/4 cent at $4.38-3/4 a bushel and July soybeans were up 4-1/4 cents, or 0.4 per cent, at $10.45 a bushel.
Wheat drew support from news that parts of China’s wheat belt in Shaanxi and Henan provinces have been hit by hot, dry weather that could reduce harvests, though it was unclear if this would prompt more imports given large Chinese stocks.
Traders also cited concern over Black Sea grain trade as Ukraine has stepped up attacks on Russian targets. Russian President Vladimir Putin told U.S. President Donald Trump in a telephone conversation on Wednesday that Moscow would have to respond to the attacks, according to Trump.
Commodity funds hold a sizable net short position in CBOT wheat futures, leaving the market open to bouts of short-covering.
Corn and soybeans followed the higher trend but rallies were capped as weather is seen as mostly favorable in the Midwest crop belt, where planting is winding down.
“I don’t see anything in the weather outlook that is particularly threatening,” said Terry Linn, an analyst with Linn and Associates in Chicago.
On the trade front, Trump and Chinese counterpart Xi Jinping are set to speak this week, the White House said on Monday, boosting hopes about negotiations after Trump accused China of violating an agreement to roll back tariffs and trade restrictions.
Vietnamese firms, meanwhile, have signed memorandums of understanding to buy $2 billion worth of American farm produce, including corn, wheat and soymeal as part of efforts to seal a new trade deal between the two countries.
