Wheat futures hit fresh highs on Friday, as drought in the northern U.S. continued to push prices upward.
Acute dryness in parts of the northern Plains have left the spring wheat crop there in dire condition, analysts say. That has prompted many traders, particularly managed funds, to get out of some widely held bets that prices would fall.
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"Anyone tired of getting beat up on the short wheat trade is probably exiting so they don't have to take on the weather risk this weekend," said Craig Turner, a senior broker at Daniels Trading in Chicago.
Updated weather forecasts from MDA Weather Services on Friday showed that declining soil moisture would continue stressing the spring wheat crop, which is prized for its higher protein content than other wheat varieties.
Recent strength in spring wheat futures at the Minneapolis Grain Exchange, which are trading near two-and-a-half year highs, has supported other wheat contracts too. Both Chicago- and Kansas City-traded winter wheat futures closed on Friday at their highest points since June last year.
"Explosive price action is possible as global millers seek high-protein wheat to blend with all of the lower-protein wheat we've been producing in the world," said Arlan Suderman, chief commodities economist at INTL FCStone in Kansas City, Mo.
Wheat contracts for July delivery rose 2.5%, to $4.65 1/4 a bushel, at the Chicago Board of Trade, the highest close in just under a year.
Strength in wheat futures also helped pull higher contracts for corn, as both can be used for livestock feed. But weather forecasts show that plenty of upcoming rain in the Midwest should create valuable moisture for corn and soybean growth, limiting some weather risk.
CBOT July corn futures rose 1.2%, to $3.84 a bushel, while soybeans climbed 0.5%, to $9.39 a bushel.
Higher crude oil prices on Friday also helped bolster soybeans, which compete as a fuel source.
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(END) Dow Jones Newswires
June 16, 2017 15:31 ET (19:31 GMT)