Wheat near 2-month high on drought concern
Chicago, August 26, 2011
Wheat rose on Thursday led by a near 2 per cent jump in Kansas City hard red winter milling wheat as drought posed a threat to seedings of the 2012 crop.
Markets were on edge ahead of a key speech by Federal Reserve Chairman Ben Bernanke on Friday, with wheat rebounding from early declines to post near 2-month highs.
"The drought in the Plains is beginning to take hold. Kansas City is the leader, there's definitely no relief from the drought in the south," said Jerry Gidel, analyst for North American Risk Management Inc.
Corn and soybeans held firm as there was more supportive news from the annual Pro Farmer crop tour.
Crop scouts on the western leg of the tour said late plantings hurt production prospects in southwestern Minnesota and scouts in the east said corn yields in southeast and east-central Iowa were better than average but soy yield potential was variable.
Pro Farmer will release a national corn production estimate on Friday. Kansas City Board of Trade (KCBT) December wheat was up 13-1/2 cents per bushel at $8.72-1/2, CBOT December was up 10-1/2 at $7.87-3/4, new-crop December corn was up 1/2 at $7.43-1/2 and new-crop November soybeans were down 3/4 cent at $13.92-3/4.
Drought in the US Plains hard red winter wheat region has led to concerns about conditions for seeding this autumn for the crop to be harvested in 2012.
Triple-digit temperatures baking the southern United States were amplifying the effects of the historic drought in the region and forecasts offered little hope for immediate relief.
94.42 per cent of the state, up from 92.78 per cent a week ago, the Drought Monitor reported.
In Oklahoma, the exceptional drought area was 66.87 per cent of the state up from 66.84 per cent.
Grains were nervous amid declines in the stock market and in gold and crude oil futures ahead of Bernanke's address to central bankers at an annual symposium on Friday in Jackson Hole, Wyoming.
In a speech at the same event a year ago, Bernanke signaled the launch of the Federal Reserve's $600 billion bond-buying exercise, or QE2, that helped to rally commodities.
"Anything he says is important and I guess the market isn't expecting much from him tomorrow," said Mario Balletto, analyst for Citigroup referring to a drop in equities markets and volatility in commodity markets on Thursday. – Reuters