Corn and soybean futures gained more than 1 per cent, tracking the bull run in wheat despite favourable weather aiding crops in the US Midwest.
Wheat futures at the Chicago Board of Trade gained 42 per cent in July, exceeding a gain of 38 per cent in 1964, according to records going back to 1959 from the Commodity Trend Service, a private charting firm. The market is up 60 per cent from June lows.
“As we saw last week, it’s very much the continuation of a bullish theme on crop production concerns,” said Luke Mathews, a commodity strategist at Commonwealth Bank of Australia.
“What we really want to get a grasp on is how much production has been lost, particularly in that Russian and FSU (former Soviet Union) region to figure out what will be the impact on trade and the current rally that we have seen.”
The worst drought in decades in Russia’s lush Black Sea region has led analysts to sharply cut crop estimates for that major wheat exporting region.
The International Grains Council on Thursday cut its forecast for Russia’s wheat crop by 7 million tonnes to 50 million and Kazakhstan by 3 million to 13.5 million.
The hottest weather since records began 130 years ago in Russia has withered crops and pushed thousands of farmers to the verge of bankruptcy.
The Emergencies Ministry said by Sunday morning, 774 fires, including 369 that started since Saturday, were raging in an area of about 130,000 hectares (500 sq miles), or about the size of the administrative area of the city of Los Angeles.
CBOT September wheat was up 2.5 per cent at $US6.77 a bushel by 0624 GMT, after touching a high of $US6.80 a bushel, the highest since Oct 1, 2008. September delivery corn gained 1.2 per cent to $US3.97-sfr1/4 a bushel and August soybeans added 1 per cent $US10.63-sfr1/2 a bushel.
Investor funds bought an estimated 16,000 CBOT wheat futures contracts, 80 million bushels, or 3.6 per cent, of this year’s estimated US wheat production of 2.216 billion bushels.
Managed funds have cut their net short position in wheat for the past six weeks and could even become net long on the commodity for the first time since April 2008 if the trend continues.
Wheat traders are also closely watching the wheat crop in Australia, where dry weather in Western Australia has raised some concerns.
Wheat crops in Western Australia, the country’s top grain exporting state are under threat from dry weather but favourable conditions elsewhere could make up for any crop loss.
“Western Australian crops remain vulnerable now, with the lack of water,” said Ron Storey, principal of private forecasting firm Australian Crop Forecasters (ACF).
In the US Midwest, rains and warm temperatures forecast this week may favour corn pollination and development of soybeans, although hot weather could stress crops in some areas, a forecaster said.