Wheat futures in Chicago experienced a rise on Wednesday, bouncing back from a five-year low due to lower-than-expected crop ratings reported by the U.S. Department of Agriculture (USDA). Despite this positive shift, prices continue to face downward pressure because of improving weather conditions across key producing regions, which signals a healthier supply outlook. As of 0337 GMT, the most actively traded wheat contract on the Chicago Board of Trade (CBOT) rose by 1%, reaching $5.33-1/2 a bushel. Earlier in the month, the price dipped to $5.06-1/4, the lowest level observed in five years.
A short-covering rally contributed to this recent uptick. However, favorable rain forecasts in the U.S. Plains, parts of Europe, the Black Sea region, and China indicated that supplies could remain abundant, leading to a 2.6% decline in prices on Tuesday. The USDA’s crop condition ratings, released following the market close on Tuesday, revealed that only 45% of the U.S. spring wheat is considered in good to excellent condition. This figure fell below even the most pessimistic analyst expectations.
Additionally, winter wheat ratings were recorded at 50%, which, while below average expectations, still represent the highest levels for this time of year since 2020. Analyst Rod Baker from Australian Crop Forecasters noted that global wheat demand remains weak, and with northern hemisphere harvests approaching, risks to overall crop production are diminishing. He indicated that although significant short positions exist, the likelihood of a market rally decreases with each passing day. In related developments, corn futures climbed by 0.3% to $4.60-3/4 a bushel while soybean prices dipped by 0.1% to $10.61-3/4 a bushel.
Pressure on corn and soybean markets is attributed to expectations of large crop yields in Brazil, with agribusiness consultancy Datagro recently raising its forecasts for the 2024/2025 season. The USDA has rated 68% of the U.S. corn crop as good to excellent, slightly under the average analyst estimate of 73%.