Wheat Futures Rise as Drought Conditions Spread — Daily Grain Highlights

By Kirk Maltais

--Wheat for July delivery rose 5%, to $6.61 1/2 a bushel, on the Chicago Board of Trade on Thursday, climbing in response to worsening drought conditions throughout the Plains and Midwest.

--Soybeans for July delivery rose 2.9% to $14.28 1/4 a bushel.

--Corn for July delivery rose 2.6% to $6.23 1/4 a bushel.

HIGHLIGHTS

Rain Dance: The weather forecast for the U.S. Corn Belt continues to be the main focus of grain traders in the latter half of the week. "Precipitation patterns are extremely slow to shift while temperatures are now above-normal through the rest of the month; this (holiday) weekend is setting up as a crucial one with rains on the way for the Midwest, but coverage unclear as much of the corn belt could use a drink," said Matt Zeller of StoneX in a note.

Below Par: Also pressuring grain futures was weak export sales reported by the USDA. In its latest weekly export sales report, the USDA said that 165,000 metric tons of wheat were sold for the week ended June 8. This total falls below the 200,000 tons to 450,000 tons forecast by analysts surveyed by The Wall Street Journal. Sales of corn and soybeans, meanwhile, fell within analyst predictions - at 294,400 tons and 526,900 tons, respectively, across the 2022/23 and 2023/24 marketing years. The week's report was seen as lackluster, said Doug Bergman of RCM Alternatives. "Solid old crop bean sales, but everything else was bad," he said in a note.

Across the Ocean: Climbing prices for corn and wheat in the EU made themselves felt in the U.S. market today, with futures rising roughly 14% since the end of May. More-expensive EU grain prices are good for U.S. futures, said Mike Zuzolo of Global Commodity Analytics. "This is the key to stopping more imports of grains coming into the U.S. from Europe," he said. "They too are having a significant weather issue from western Europe into the Baltics."

INSIGHT

Going Viral: Drought conditions are quickly spreading through crop-growing fields, said the USDA. In its latest weekly data, the agency estimates that 57% of the U.S. corn crop is experiencing drought, and 51% of soybeans are dealing with drought conditions. For both, that's up 12% from last week, a sharp surge amid increasingly severe drought conditions in the Midwest and Plains. The spread of drought comes after the NOAA confirmed last week that El Nino is officially in force, with odds supporting the growing strength of the system.

Crunch Time: Most row crops in the U.S. have been planted, and are in the early stages of their growth. This makes the surge in farmland affected by drought even more of an important topic for farmers - who in some areas are facing a 'make-or-break' situation for their nascent crops. "We are currently ok but crunch time is here," said Brent Judisch, a farmer in Cedar Falls, Iowa. "Our most critical time for the crop and our highest water uptake is the next 4 weeks - especially for the corn. We have survived on subsoil moisture to this point, we will need 1.5 inches of rain each week thru the first of August to have any kind of a trend line crop." Judisch added that weather over the next month will be critical in determining the size of the 2023/24 crops.

AHEAD

--The CFTC will release its weekly commitment of traders report at 3:30 p.m. ET Friday.

--The USDA and the Chicago Board of Trade will be closed in observance of Juneteenth on Monday. Both will reopen on Tuesday.

--The USDA will release its weekly grains export inspections report at 11 a.m. ET Tuesday.

--The USDA will release its weekly crop progress report at 4 p.m. ET Tuesday.

Write to Kirk Maltais at kirk.maltais@wsj.com

(END) Dow Jones Newswires

June 15, 2023 15:22 ET (19:22 GMT)

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