Wheat futures advanced, adding to three weeks of gains, as dry weather in major growing regions and a threat of trade disruptions with Russia, the fifth-biggest producer, cause concerns about supply.
The U.S. and Europe are "united in imposing a cost" on Russia for its actions in Ukraine, U.S. President Barack Obama said today, as world leaders meet in the Netherlands to discuss their response to rising military tension in one of the world’s main wheat-exporting regions.
"Traders are worrying about a possible Russian wheat disruption in the coming weeks after the western sanctions," Arnaud Saulais, a broker at Starsupply Commodity Brokers in Nyon, Switzerland, wrote in an e-mailed comment. "Dryness in Black Sea regions is still supporting prices."
Soft red winter wheat for May delivery rose 1.1 percent to $7.005 a bushel on the Chicago Board of Trade by 7:26 a.m. The grain climbed 27 percent from a close of $5.515 on Jan. 29. Milling wheat for November delivery traded on NYSE Liffe in Paris added 0.3 percent to 204 euros ($281) a metric ton.
Wheat in the southern U.S. Plains, eastern Germany and Poland, Australia and southern Ukraine faces dry conditions, according to analysts Chris Gadd and Kona Haque at Macquarie.
"All of these concerns have yet to do significant damage to production due to the early stage of the crops development," Gadd and Haque wrote in a report dated March 21. "If dry conditions persist for the next month though, this picture could change rapidly."
About 28 percent of the U.S. Great Plains was in moderate to exceptional drought as of March 18, from 23 percent a week earlier, according to the U.S. Drought Monitor. The portion of Kansas wheat in poor or very poor condition increased to about 20 percent as of March 16 from 18 percent a week earlier, while Texas wheat rated poor or very poor rose to 52 percent from 31 percent, according to the U.S. Department of Agriculture.
"Even if weather risk due to the current water deficit in the Great Plains and in central and eastern Europe is definitely present, it’s far from being irreversible at this point," Paris-based farm adviser Agritel wrote.
Corn advanced for a second day on speculation that demand will increase for supplies from the U.S., the world’s biggest exporter.
Corn for May delivery rose 0.8 percent to $4.8275 a bushel in Chicago. Futures lost 1.4 percent last week, trimming this year’s rise to 15 percent.
U.S. exporters sold 340,000 tons of corn to Egypt for delivery by Aug. 31, according to the USDA. Prices gained 1.5 percent on March 18, the most in more than a week, after USDA data showed the grain inspected for shipment from the U.S. more than doubled to 976,742 tons in the week ended March 13 from a year earlier.
"Support came from fresh export demand," Vanessa Tan, an analyst at Phillip Futures Pte in Singapore, said in an e-mail. "This helped to lift sentiment and provided support to corn."
Soybeans for May delivery gained 0.6 percent to $14.17 a bushel, after rising 1.5 percent last week.