Wheat futures rose for the second consecutive day with worries about short-term supply and adverse weather for crops.

Adverse weather across the U.S. plains states is giving support to futures, while the Ukrainian grain association expects that its harvest could shrink to 18.2 million tons, almost halving last year’s output. Both the U.S. Department of Agriculture and United Nations cut their outlooks for Ukrainian corn shipments on Friday.

“The wheat market is rallying ahead of this afternoon’s weekly crop progress report after last week’s report showed the second-lowest ratings on record for early April for the winter wheat crop,” said Arlan Suderman, chief commodities economist at StoneX. “The condition of the U.S. crop matters a lot more with Ukraine absent.”

Futures gained as much as 3.4% with strong volume, before closing 2.9% higher at $10.89 per bushel.

Corn reversed an early rally in Chicago, closing slightly lower after gaining as much as 1.3%. Futures slipped despite signs that China is booking more corn from the U.S. old crop to replace Ukrainian grains, as there are worries about slow demand and a big crop in Brazil. Soybeans sank 2% to $16.5525 a bushel.

The supply constraints are expected to persist into the 2022-23 season, with Ukraine’s grain association projecting the corn crop to sink 39% from last year. Focus is turning to the weather across the rest of the Northern Hemisphere as plantings kick-off, at a time when pricey fertilizer could limit sowing.

“The market is certainly more worried about global corn stocks with Ukraine out of the picture, Mato Grosso leaning drier through pollination and U.S. Midwest forecasts showing risks for this summer.” said Suderman.

In the U.S., a “significant winter storm” may bring heavy snow to the northern Plains states beginning Monday night, according to the National Weather Service. Cooler-than-usual weather is also expected in the central U.S. next week, at a time when spring planting typically begins to accelerate.

In South America, rains will benefit crops this week, especially in Paraguay and Southern Brazil. Starting on April 20th, a drier pattern should form in the middle-west, keeping most of precipitation to the southern and northern parts of the country, according to Somar Meteorologia. The middle-west region is responsible for almost 70% of the second corn crop that should be harvested in June.

 

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