The price of wheat increased in Chicago on speculation that the anticipated rain in the coming couple of days may not be sufficient to reduce dryness in the US.
A QT Weather report forecasted little rain amounting to 0.2 inch this week over the central US plains, after most sections of the region got less than half the usual rain in the last 30 days.
The US Department of Agriculture attributed the recent deterioration of wheat crops across regions such as Kansas and Texas to dry weather. The department plans to start releasing weekly reports on crop ratings on a national scale, according to Bloomberg.
“Prices should be supported by the rise of the temperatures and the lack of moisture in the U.S. and western Europe,” said Arnaud Saulais of Starsupply Commodity Brokers. He added that the anticipated upbeat US crop rating report might work to the advantage of markets further.
Wheat for May delivery traded at $6.7525 as of 7:03 am after advancing 0.8% on the Chicago Board of Trade. Futures declined 3.7% last week, the biggest fall since January 10. The commodity surged 12% in 2014 while dry and cold weather conditions put crops at risk.
Technical buying buoyed the wheat market before a monthly USDA report on demand and supply that will be released on Wednesday. The report is expected to show a stringent outlook for US supplies of grains such as soybeans, corn and wheat, Reuters reports.
Joseph Vaclavik, Standard Grain boss said that although the Wednesday report has the potential to trigger surprises, weather and production data will have a greater influence.
In the meantime, the per-bushel price of corn for May delivery declined 0.4% to $4.995 in Chicago, after gaining 2% last week.
To contact the reporter of this story; Jonathan Millet at email@example.com