AN EMERGING weather market based on concerns surrounding dryness in North America continues in spite of rain over the weekend in key parts of the US and Canada.
The major gains are being found on the Minneapolis futures exchange, a key indicator for spring wheat crops.
Minneapolis spring wheat futures for July hit their highest levels for an immediate contract since 2015, rising to US633 cents a bushel before closing at US626c/bu – a daily rise of 4.4pc.
The price gains were spurred on by US Department of Agriculture (USDA) data which lowered the percentage of US spring crop rated good or excellent at 45pc, a10pc decline from their last report.
Gains have been less pronounced on other futures exchanges.
Chicago Board of Trade (CBOT) July wheat futures had crept close to US460 cents a bushel last week on the back of concerns in the Northern Plains of the US and southern parts of the Canadian grain belt but fell sharply earlier in the week to sit at US437c/bu after the rain before rallying to US445c/bu on Wednesday morning, Australian time.
This still represents a significant premium on late May prices before concerns about weather started emerging.
And there are other global weather factors starting to concern grain traders, not least the situation in Australia, where crops in parts of Western Australia and South Australia are in increasingly urgent need for rain.
James Maxwell, Australian Crop Forecasters, said the combination of a drier than average autumn through much of SA and WA, combined with long-term forecasting models predicting drier than average conditions throughout the growing season, were being closely monitored.
“WA and western/central SA have had a particularly dry start to the new season, so we’ll be watching closely at what spring might have in store for us,” Mr Maxwell said
Nidera Australia origination manager Peter McMeekin said before the rain, US Department of Agriculture (USDA) spring wheat crop ratings were the lowest they had been in ten years.
He said in spite of the rain there would be continued concerns over crop condition.
However, he said other big wheat producing regions, such as Kansas, had recovered from the flooding that hit in April.
“Like in Australia last year, the worst hit areas have certainly suffered production losses, but reports to date suggest that the fringe areas have benefited from the rain and some pundits are predicting that yields from those areas may surprise to the upside.”
Australian new crop wheat prices remain at around $260/t.