Wheat Futures Gain for Second Day as Dry Weather Hurts Growers

By Luzi Ann Javier

July 16 (Bloomberg) -- Wheat futures in Chicago gained for a second day after Argentina lowered its wheat planting estimate and hot weather in Ukraine and Russia, the world’s second- largest exporter, continued to stress crops.

The Buenos Aires Cereals Exchange cut its wheat planting estimate for this year, already the lowest on record, to 2.75 million hectares (6.8 million acres) as the country’s drought continued. Hot weather in parts of Ukraine, the world’s fourth- largest corn exporter, and southern Russia will stress corn crops, according to a DTN Meteorlogix LLC report yesterday.

There are “a few areas of the world where the conditions aren’t favorable,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia in Sydney, said by phone today. “That’s certainly something that’s supportive” of grain prices, he said.

Wheat for September delivery added as much as 0.4 percent to $5.37 a bushel, extending yesterday’s 0.9 percent gain. The most-active contract was 0.2 percent higher at $5.355 a bushel at 1:29 p.m. Singapore time.

Corn for December delivery gained as much as 0.5 percent to $3.3925 a bushel in after-hours trading on the Chicago Board of Trade after losing 2.3 percent yesterday. Futures were little changed at $3.3725 a bushel.

Farmers in Argentina, the fifth-largest wheat exporter in the 2007-2008 season, have planted 1.9 million hectares of the grain this crop year, 45 percent less than a year earlier, the Buenos Aires Exchange said yesterday.

Russian Weather

“Dry weather and sometimes hot temperatures through the spring wheat areas of the Urals in Russia and west Kazakh increases stress to jointing to early reproductive wheat,” Meteorlogix said in a weather forecast yesterday.

Russia last week trimmed its grain harvest estimate by 6 percent to 85 million tons because of the drought. Ukraine’s corn exports are forecast to decline to 3.5 million tons in the year beginning October, down from 5.5 million tons a year ago.

Gains in corn futures may be limited by higher yields in the U.S., Mathews said. Corn yields will increase to a record 163.7 bushels an acre, up from 153.9 bushels harvested last year, said Oscar Vergara, an agricultural consultant for AIR Worldwide, a catastrophe risk-modeling firm, yesterday.

Often, “favorable conditions in the U.S. override those isolated events over in Russia,” Mathews said. Higher harvests in the U.S. may make up for slower output in other exporting countries, he said.

Soybeans for November delivery, after the U.S. harvest, were little changed at $9.05 a bushel at 1:43 p.m. Singapore time, after gaining as much as 0.9 percent earlier.

To contact the reporter on this story: Luzi Ann Javier in Singapore at javier@bloomberg.net