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CANBERRA - Chicago wheat futures hovered near a two-week high on Thursday as ample global supply put the brakes on a rally caused by dry weather in the U.S. Plains that threatens to reduce production.
Corn futures rose slightly and soybeans were little changed after both contracts rose on Wednesday, thanks to rain disrupting early planting in the U.S. Midwest.
Chicago Board of Trade (CBOT) wheat for July delivery was up 0.1% at $6.02-1/2 a bushel at 0614 GMT. Prices were up around 3.5% so far this week.
The drought-afflicted area in the U.S. accounts for 29% of the country's total wheat production and 72% of its hard red winter wheat, according to broker StoneX.
"With the exclusion of dryness in the U.S., the rest of world production is actually looking decent," said Dennis Voznesenski, an analyst at Commonwealth Bank in Sydney.
Winter wheat in Northern Hemisphere producers like Russia, Ukraine and Europe was planted well before the Iran war pushed up fuel and fertiliser prices and are in good shape, he said.
Southern Hemisphere producers including Australia and Argentina, which are only now planting winter crops, are more vulnerable to high costs but their harvests are not due until late in the year, he added.
"The world’s waiting a little bit. The longer the Straight of Hormuz is closed, the more production shortages there will be." High urea prices offered in a massive Indian tender process underlined how expensive farm inputs will be this season due to the war in Iran. Indian Potash Ltd received offers at around $1,000 a metric ton, company sources said. A French growers group said on Wednesday that the area planted with corn in France could fall by 10-15% this year due to high costs. CBOT most-traded corn Cv1 was up 0.2% at $4.52 a bushel and soybeans Sv1 were flat at $11.66-1/2 a bushel.
The U.S. soy and corn planting season is at an early stage but delays can reduce the yield potential of crops. Some areas that missed out on rains are, meanwhile, too dry for healthy crop development.
