PARIS/SINGAPORE- Chicago wheat futures rebounded on Tuesday as the worst U.S. winter crop rating since 1989 put attention back on global supply already strained by the war in Ukraine. Corn rose for a second straight session as a slow start to U.S. planting and strong export demand underpinned prices. Soybeans regained ground in step with other oilseed markets as Indonesia indicated it could extend an export ban to a wider range of palm oil products.
After Monday's market close, the U.S. Department of Agriculture (USDA) rated 27% of U.S. winter wheat in good-to-excellent condition, down three percentage points from a week ago and the lowest for this time of year since 1989, as drought persists in the Plains wheat belt. The figure also fell below the lowest in a range of analyst expectations. "U.S. HRW (Hard Red Winter) wheat crops are nearing a point where forecasts will be downgraded," said Tobin Gorey, director of agricultural strategy at the Commonwealth Bank of Australia. The most-active wheat contract on the Chicago Board of Trade (CBOT) rose 2.2% to $10.96-1/4 a bushel by 1101 GMT. The contract had fallen to its lowest in over two weeks on Monday, as sluggish U.S. wheat exports and investor concerns about economic growth weighed on prices.
"A lower U.S. wheat crop would further exacerbate the supply tightness on the wheat market as Ukraine is likely to grow significantly less wheat this year on account of the war," Commerzbank said in a note. Russia's two-month-old invasion of Ukraine is also disrupting Black Sea corn supplies and making the market sensitive to crop prospects in North and South America.
The USDA said the U.S. corn crop was 7% seeded by Sunday, below the average analyst estimate of 9% and the five-year average of 15%. In the U.S. Midwest, cool and wet conditions have hampered early corn and soybean planting. U.S. soybean planting was 3% complete, matching trade expectations but behind the five-year average of 5%, the USDA's data showed. CBOT corn gained 0.9% to $8.05 a bushel, while soybeans were up 0.9% at $16.90-1/4 a bushel. Oilseed markets had slid on Monday as Indonesia clarified that an export embargo announced on Friday would cover refined palm olein cooking oil and not raw material.
However, Indonesia is prepared to widen its ban, according to details presented at a meeting between government and industry officials. (Reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore; Editing by Sherry Jacob-Phillips, Subhranshu Sahu and Shailesh Kuber)