Wheat Futures Climb as Drought Situation Worsens -- Daily Grain Highlights

By Kirk Maltais

-- Wheat for July delivery rose 2.1%, to $6.59 1/2 a bushel, on the Chicago Board of Trade on Friday with expanding drought conditions and tensions in the Black Sea pushing prices higher.

-- Corn for July delivery rose 1.4% to $5.98 a bushel.

-- Soybeans for July delivery 1.3% to $14.38 a bushel.

HIGHLIGHTS

Bad to Worse: Areas of extreme and exceptional drought have grown, according to data from the U.S. Drought Monitor. It says conditions have grown worse in Oklahoma, Kansas and Nebraska.

Kansas has the largest portion of the state locked in an exceptional drought, the highest level reported.

Meanwhile, the entire state of Nebraska is covered in some level of drought. The degrading conditions provided support for grain futures, as the dry conditions stifle new planting and further hurt an already-battered winter wheat crop.

Losing Hope: Along with expanding drought conditions seen in the Southern Plains, wheat futures got a lift from agitation surrounding the next extension of the Black Sea Grain Initiative, if such an extension takes place at all.

"New pessimism regarding the Black Sea Grain Export Corridor has added to the upside volatility," said AgResource in a note. The firm added that through midday, funds had purchased approximately 5,600 contracts of wheat, 6,800 contracts of corn and 5,500 contracts of soybeans.

Buying Interest: Losses seen in trading earlier this week may have spurred some interest from export buyers who see prices as now competitive, said Tomm Pfitzenmaier of Summit Commodity Brokerage. In a note, Mr. Pfitzenmaier said that futures may have found a seasonal low, and are following crude-oil futures back up as those prices rebound from a six-week low and risk appetite returns to that market as well.

INSIGHT

Quick Start: Next week's WASDE report from the USDA is expected to have fresh estimates for U.S. acreage and yields this spring.

However, the report isn't likely to reflect the fast pace of planting that the Crop Progress Report has shown in recent weeks, said Hedgepoint Global in a note.

"Planting started early and advanced fast, particularly for soybeans," the firm said. "It is important to mention, however, that we should not expect any impacts already on next week's WASDE yields."

On the Rise: Global food prices in April rose for the first time in a year, and higher costs for sugar led the increase, the Food and Agriculture Organization of the United Nations said Friday. The UN FAO's food-price index, which tracks global prices for a basket of staple foods, rose to 127.2 points in April, up 0.6% from March, the first time prices have risen in a year.

The index still remains 19.7% below its level in April 2022, when prices skyrocketed to record levels following Russia's invasion of Ukraine.

AHEAD

-- Tyson Foods Inc. is scheduled to release its second-quarter earnings report before the stock market opens on Monday.

-- The USDA is due to release its weekly grains export inspections report at 11 a.m. EDT Monday.

-- The USDA is scheduled to release its weekly crop progress report at 4 p.m. EDT Monday.

-- Yusuf Khan contributed to this article.

Write to Kirk Maltais at [e-mail]

(END) Dow Jones Newswires

05-05-23 1549ET