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Wheat Rallies to 10-Month High on Weather Fears

May 29, 2018 at 16:54 by Andrew Moran

Wheat futures are rallying on the first trading day of the holiday-shortened week. With traders worried about weather impacting the US Plains, wheat prices touched their best levels in 10 months, adding more to their 2018 gains.

July wheat futures advanced $0.025, or 0.41%, to $5.452 per bushel at 16:26 GMT on Tuesday on the Chicago Board of Trade (CBoT). Wheat prices have touched their highest levels since July 2017 and are up more than 20% year-to-date. If wheat continues to make these impressive gains, it could be on track for an impressive weekly jump.

According to the latest forecasts, adverse weather might impact the region and affect production volumes. Over the weekend, the Plains experienced higher-than-normal temperatures, while experts say that the higher temperatures could linger for the next several days or so.

Two other major wheat exporters, Australia and Russia, are also enduring unfavorable weather conditions that could crimp their output levels. This trend could benefit US wheat farmers, especially since they have been losing market share to fast-growing suppliers Sydney and Moscow.

In recent months, many US farmers have transitioned to cotton. There are two reasons for this: farmers cannot take advantage of higher wheat prices because of the global supply glut and cotton requires fewer amounts of water at a time when the Plains are suffering from droughts.

Southern Kansas farmer Darrin Eck told Reuters:

I have switched out of grain pretty much completely. It [is] rough to raise beans or corn. But, if we get a little bit of rain, the cotton works.

July cotton futures rose $0.04, or 4.48%, to 93.21 cents per pound on the ICE Futures exchange.

In other agricultural commodities, July corn futures slumped $0.022, or 0.55%, to $4.037 per pound. July soybeans future dipped $0.025, or 0.24%, to $10.39 a bushel. July orange juice futures climbed $0.07, or 0.41%, to $1.70 a pound. July sugar futures rose 0.04 cents, or 0.32%, to 12.50 cents a pound.

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