Grain and soybean futures rose Thursday, continuing a recent rally driven by weather concerns.
Spring wheat futures led the gains as drought-like weather persists in parts of the northern Plains.
Traders were faced with a "potentially explosive situation," said Ken Morrison, a trader and publisher of a commodities-market newsletter in St. Louis, as the weather stresses the protein-rich spring wheat crop, used in higher-end goods like pastries.
Spring wheat futures at the Minneapolis Grain Exchange rose 1.5% to $6.04 1/4 a bushel on Thursday, approaching the highest point in two years.
Dry, hot conditions are expected to continue in parts of Minnesota and the Dakotas, MDA Weather Services said in a note to clients.
Wheat contracts for the lower-protein winter crops grown in the Midwest and southern Plains also climbed. Chicago wheat futures rose 1% to $4.49 1/4 a bushel at the Chicago Board of Trade.
Momentum from the spring wheat futures helped carry those contracts, said Bill Nelson of St. Louis-based Doane Advisory Services, though they remained at an unusually sharp discount to the Minneapolis contracts.
Corn and soybean futures also rose on weather concerns, as the hot and dry conditions move into Midwestern growing regions. That has encouraged managed funds, who were betting heavily that prices would fall, to reverse some short positions.
But analysts said it was too early to know whether the adverse weather would affect crop yield, with the critical development stages coming later in the summer.
Corn futures jumped at the opening on Thursday, rising 7 cents, before easing off. CBOT July contracts closed 1 cent, or 0.3%, higher at $3.85 3/4 a bushel.
Some analysts said the corn rally could be limited. The enormous South American production that encouraged managed funds to go short hasn't changed, Mr. Morrison said, while the impact on crop yield remains uncertain.
Weekly export sales for corn released Thursday by the U.S. Department of Agriculture fell below expectations, a possible signal that international buyers were already turning to crops from Brazil and elsewhere.
"The crop is well established and made in South America," Mr. Morrison said. "We're not going to change the supply push from there."
Crude oil prices steadied after a selloff on Wednesday. That helped soybeans, which compete as a fuel source. CBOT July soybean futures rose 0.8% to $9.38 a bushel.
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(END) Dow Jones Newswires
June 08, 2017 16:41 ET (20:41 GMT)