Wheat extends gains amid poor weather in the US and Middle East tensions

Chicago wheat futures rose on Monday, supported by drought conditions in U.S. growing regions and fears of a collapse in the ceasefire between the United States and Iran.

Corn and soybeans also received support from war-related concerns, but faced pressure from expectations of an accelerating pace of U.S. planting.

The most-active wheat contract on the Chicago Board of Trade (CBOT) rose 1.2% to $6.06 3/4 per bushel by 11:18 GMT, following a strong performance last week. Corn rose 0.06% to $4.48 3/4 per bushel, while soybeans remained unchanged at $11.67 1/4 per bushel.

Oil prices also rose after the United States announced it had seized an Iranian cargo ship that attempted to break the naval blockade, while Iran stated it would retaliate.

Matt Ammermann, commodity risk manager at StoneX, said: “Wheat is rising in early trading as the war risk premium returns to the market.”

He added: “As we saw last week, the focus remains on poor crop conditions in the United States and drought in the Western Plains threatening hard red winter wheat, though recent forecasts suggest some hopes for rainfall.”

He noted that soybeans are also receiving support from the risks of war between Iran and the United States.

Argus analysts said in a note: “U.S. weather remains the key factor under close observation, as the lack of rain in winter wheat areas has long been affecting production potential.”

However, gains for soybeans were limited by expectations that the U.S. Department of Agriculture (USDA) might report a rapid pace for soybean planting in its U.S. crop progress report due later on Monday.

Ammermann said: “There are expectations that U.S. farmers are prioritizing planting soybeans first, especially in southern states, meaning today’s planting pace could be higher than usual.”

He added: “Corn remains in a mixed position, and the market seems to be largely ignoring the impact of crude oil for now. Additionally, warm weather in the U.S. Midwest suggests expectations for an accelerating pace of corn planting in the coming weeks.”