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Wheat futures rally after U.S. slashes harvest estimates

07/12/2021 | 04:45pm EDT

* U.S. cuts durum, spring wheat harvest estimates

* Agency raises U.S. corn crop forecast from June

* Corn crop condition rating improves

CHICAGO, July 12 (Reuters) - U.S. wheat futures climbed on Monday on lower-than-expected production estimates for domestic crops damaged by searing weather and drought, analysts said.

Corn and soybean futures also jumped.

The U.S. Department of Agriculture, in a monthly report, slashed its harvest outlook for spring wheat other than durum by 41% from last year to 345 million bushels, putting it 25% below the average of analysts' estimates. The supply includes hard red spring wheat, grown in the Dakotas to make artisan breads, bagels and pizza crust.

The USDA, in a separate weekly report, said 16% of the U.S. spring wheat crop was in good or excellent condition, down from 68% a year earlier after heat and dryness hit growing areas.

"They really slashed that spring wheat crop, more than many of us expected they would," said Ted Seifried, chief ag market strategist for Zaner Group.

Extreme weather may further fuel global food inflation and is a blow to grain farmers who have struggled with labor shortages and higher transportation costs during the pandemic.

The U.S. durum crop, used to make pasta, was pegged at 37.2 million bushels, down 46% from 2020 and 34% below analysts' estimates.

"The combined other spring and durum number was incredibly low," said Terry Reilly, senior commodity analyst for Futures International.

MGEX September hard red spring wheat surged 43 cents to $8.57-1/4 a bushel.

At the Chicago Board of Trade, September soft red winter wheat futures jumped 25-3/4 cents to $6.40-3/4 a bushel.

CBOT December corn, which represents the U.S. crop that will be harvested in the autumn, rose 16 cents to $5.33 per bushel. November soybeans advanced 21 cents to $13.50-1/4 per bushel amid gains in vegetable oil markets.

The USDA raised its monthly forecast for the U.S. corn harvest and left its soybean crop estimate unchanged.

In the weekly report on crop conditions, the agency raised its good-to-excellent rating for corn by one percentage point from last week. (Reporting by Tom Polansek in Chicago, Michael Hogan in Hamburg and Colin Packham in Canberra; editing by David Evans, David Gregorio and Jonathan Oatis)

ę Reuters 2021
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