CANBERRA - Chicago wheat futures rose for a second day on Tuesday, as ​an expanding drought ⁠in the U.S. wheat belt threatened to reduce production, while the ‌U.S. dollar weakened. However, gains were limited by the possibility of a diplomatic solution to the ​war in Iran, which lowered oil prices and raised hopes that disruption to global ​fuel and ​fertiliser supply could be eased.

Corn futures also rose, while soybeans were little changed. The most-active wheat contract on the Chicago Board of ⁠Trade (CBOT) Wv1 was up 0.3% at $5.84-1/4 a bushel, as of 0437 GMT, while CBOT corn Cv1 rose 0.5% to $4.42-1/2 a bushel and soybeans Sv1 were flat at $11.62-1/2 a bushel.

Bendigo Bank Agribusiness analyst Rod Baker said wheat supply ​was likely ‌to tighten due ⁠to dry ⁠U.S. conditions and the high price of fuel and fertiliser.

"There's a lot of wheat ​around, but prices will have to start coming up ‌at some stage," he said.

Forecaster Commodity Weather ⁠Group said two-thirds of wheat in the U.S. Plains were at risk of yield loss. The U.S. Department of Agriculture rated 34% of the winter wheat crop in "good or excellent" condition on Monday, down from 35% last week and below the average estimate from a survey of analysts.

Wheat futures were holding above their 50-day moving average, which provided technical support. The U.S. dollar slipped to its weakest since early March, making U.S. commodities ‌cheaper for buyers with other currencies, after the U.S. ⁠said it continued to engage with Tehran to ​make a deal even as it blocked Iran's ports.

Asian stocks rose, and oil retreated from highs above $100 a barrel. Meanwhile, consultants APK-Inform and Argus trimmed their forecasts ​for Ukraine's 2026 ‌wheat harvest and the IKAR consultancy lowered its estimate ⁠for Russia's wheat exports in April.