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Wheat climbs on signs of drought damage in northern U.S. Plains

07/28/2021 | 02:17pm EDT

CHICAGO, July 28 (Reuters) - U.S. wheat futures rallied more than 2% on Wednesday on increasing concerns over U.S supplies after a tour showed crop damage due to dry weather in a key producing state, traders said.

Corn and soybean futures also firmed, but trade was choppy as brokers weighed fears of declining crop ratings against forecasts for cooler temperatures next week and sluggish export demand for U.S. supplies.

As of 12:59 p.m. CDT (1759 GMT), Chicago Board of Trade September wheat was up 15-1/2 cents at $6.90 per bushel. Minneapolis Grain Exchange September spring wheat futures were back above $9 a bushel, rising 27-3/4 cents to $9.06.

CBOT benchmark December corn was up 3 cents at $5.49-1/4 a bushel and November soybeans were up 1-3/4 cents at $13.61-1/4 a bushel.

Wheat rose after scouts on an annual crop tour said spring wheat yield potential in portions of North Dakota, by far the country's top producer of the food grain, was well below average due to a severe drought.

Tour scouts on Tuesday projected an average spring wheat yield for southern and east central North Dakota at 29.5 bushels per acre (bpa) on the first day of a three-day tour, below the tour's five-year average of 43.3 bpa.

The drought extends into South Dakota and Montana as well as portions of Canada.

"Rains are expected to pick up a bit in South Dakota on Friday, but ... will be too late to improve conditions for spring wheat, as growth is finishing up," space technology company Maxar said in a daily weather note.

Additional support stemmed from news that Russian agriculture consultancy Sovecon on Tuesday cut its forecast for Russia's 2021/22 wheat exports by 1.3 million tonnes to 37.1 million tonnes. Russia is the world's biggest wheat exporter.

Corn and soybean futures turned up after a choppy start as market players awaited fresh direction. Dry conditions affecting portions of the Midwest crop belt lent support, with soybeans approaching their key pod-setting phase next month.

"U.S soybean crops are on the cusp of their crop crucible with August almost upon us, and so Midwest weather starts to take on greater importance," said Tobin Gorey, director of agricultural strategy, Commonwealth Bank of Australia.

(Reporting by Julie Ingwersen in Chicago Additional reporting by Colin Packham in Canberra and Sybille de La Hamaide in Paris; Editing by David Evans and Matthew Lewis)

© Reuters 2021
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