Supply worries, weather spur rally in crop prices ahead of U.S. report

Supply worries, weather spur rally in crop prices ahead of U.S. report

11 May    Finance News

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CHICAGO — Chicago Board of Trade grain and soybean futures jumped on Wednesday, as traders uneasy about world supplies adjusted positions a day before the release of U.S. crop data.

Concerns about poor global crop weather helped support gains, with MGEX spring wheat futures setting contract highs as rains prevent plantings in the U.S. Northern Plains, analysts said.

“We just can’t get the crop in the ground,” said Randy Martinson of Martinson Ag Risk Management in Fargo, North Dakota.

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MGEX July spring wheat surged 42-1/2 cents to end at $12.56 a bushel and set a new high of $12.58. At the CBOT, July soft red winter wheat jumped 20-1/4 cents to close at $11.13 a bushel.

The most-active CBOT corn contract rose 13-1/4 cents to finish at $7.88-1/2 a bushel, while soybeans advanced 14-1/2 cents to close at $16.06-3/4 a bushel.

A rally in crude oil helped support the gains, brokers said.

Grain traders are focused on the release of the monthly U.S. Department of Agriculture (USDA) global crop report due on Thursday. It will include the first official supply and demand estimates for 2022/23, the new crop year.

The report will also update forecasts for Ukraine’s crop exports after Russia’s invasion and for production in drought-affected regions such as Brazil and the European Union.

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The war in Ukraine has heightened supply concerns as fighting has disrupted shipments from the Black Sea, a major corn and wheat supplier.

“For the most part, trade is expecting to see tight stocks to use numbers across the board for the 2022/23 marketing year,” said Karl Setzer, commodity risk analyst for AgriVisor.

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The USDA is expected to peg 2021/22 U.S. corn ending stocks at 1.412 billion bushels, down from 1.440 billion bushels in April, according to a Reuters survey of analysts. They estimate 2022/23 stocks even lower at 1.352 billion bushels. (Reporting by Tom Polansek in Chicago, Gus Trompiz in Paris and Naveen Thukral in Singapore; Editing by Sherry Jacob-Phillips, Vinay Dwivedi, Alexandra Hudson and Paul Simao)

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