US drought, Algeria tender and oil recovery combine to support grains

Wheat prices made headway, as growing concerns for dryness testing the US winter crop added to support from a partial recovery in crude oil values.

 

In the latest stage of the Iran war, Tehran launched fresh attacks on Israel and other Middle East countries, and denied holding talks with the US, as announced by US President Donald Trump on Monday.

 

However, with Iran confirming that mediation efforts were under way with other countries, and signs of some improvement in prospects for improving shipping through the Strait of Hormuz, crude oil markets recovered only some lost ground.

 

Brent crude for June-26 added 4.4% in late deals, returning above $100/Bbl, but remaining down nearly 6% for this week so far.

 

Nonetheless, with oil prices, a bellwether for Iran war jitters, on the rise, correlated assets such as grains made ground too.

 

Chicago soft red winter wheat for May-26 stood 0.8% higher in afternoon deals, regaining most of the territory lost in the last session, backed too by a boost to concerns over dryness-tested US Plains winter wheat from weekly crop condition data.

 

The USDA dated 46% of winter wheat in Kansas, the top growing state, as in “good” or “excellent” condition, down by 6 points week on week, with the Oklahoma reading down 4 points at 14% good or excellent, the lowest for the time of year since 2018.

 

Weather forecasts suggested a hot and dry week for the Plains, threatening further deterioration for crops now relatively well advanced in southern areas, if emerging from dormancy in the north.

 

In a reflection of market concerns, May-26 futures in hard red winter wheat, as grown in the Plains, added 1.0%, slightly outperforming soft red winter wheat, which is seeded in the Midwest.

 

Wheat found support too from Algeria’s late announcement of a further wheat tender, its third in a month.

 

In Europe, Paris milling wheat for May-26 gained 0.5% in late deals, London feed wheat for May-26 traded marginally higher, having outperformed in the last session.

 

Among oilseeds, Paris rapeseed futures for May-26 found support too from the recovery in crude oil, adding 0.6% to settle back above the €500.00/t mark, although failing to break through resistance at its 20-day moving average at €500.70/t.

 

Headway remains somewhat curtailed by a retreat in rapeoil prices from early-month highs close to €1,270/t. The vegetable oil was on Monday priced in Germany at €1,220/t.