U.S. grains: Wheat rises on Ukraine supply concerns

(Lisa Guenther photo)

Chicago | Reuters — U.S. wheat futures advanced on Tuesday on concerns about reduced supplies from Ukraine, a major exporter, while new-crop soybeans slipped as a widely watched crop tour projected bumper U.S. harvests.

Traders focused on Ukraine, expected to be the world’s second-largest grain exporter in the 2014-15 marketing year, as a spokesman for the prime minister said the country will lose 15 per cent of its grain crop in two violence-hit regions. [Related story]

Concerns that Ukraine may possibly scale back exports helped fuel gains, said Jerry Gidel, chief feed grain analyst for Rice Dairy in Chicago.

“In reality there’s probably not going to be any long-term halt of exports,” he said.

Chicago Board of Trade December wheat rose 0.8 per cent to $5.58-1/2 a bushel after closing down 1.6 per cent on Monday, when worries about the conflict between Ukraine and Russia temporarily eased (all figures US$).

December corn rose 0.2 per cent to $3.72-1/4 a bushel, adding to a decline of 1.5 per cent in the previous session.

November soybeans lost 0.5 per cent to $10.52-3/4 a bushel on good U.S. crop conditions and projections for large U.S. harvests from a private crop tour.

On Monday, USDA rated the condition of U.S. soybean crops as 71 per cent good-to-excellent, up from 70 per cent a week earlier.

Corn and soybean fields northwest of Indianapolis consistently showed robust yield potential on Tuesday, with rains this week likely to enhance already bin-busting prospects for the crops, participants on the Pro Farmer Midwest Crop Tour found.

During the next two days, the tour will likely discover even bigger harvest potential in top-producing states like Iowa and Illinois, said Rich Nelson, chief market strategist for brokerage Allendale in McHenry, Illinois.

“There’s a growing realization that as they move toward Illinois and Iowa, that this is going to be the real bearish issue,” he said.

Traders paid close attention to the tour amid expectations the U.S. Department of Agriculture will increase its yield estimates in the coming months.

On Monday the tour estimated South Dakota’s corn yield at 152.71 bushels per acre, below the 161.75 bushels estimated by the tour last year, but above its three-year average of 125.7 bushels.

USDA last week estimated the state’s yield at 139 bushels.

“The crop is coming in just looking peachy, according to the tour,” said Jack Scoville, vice-president for brokerage Price Futures Group in Chicago.

The tour is scheduled to release yield forecasts for Indiana and Nebraska later on Tuesday. Pro Farmer’s editors will release their estimates of total U.S. crop production on Friday.

— Tom Polansek reports on ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Sybille de La Hamaide in Paris.

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