GRAINS-Wheat rallies as Ukraine dam breach adds to supply worries

Credit: REUTERS/Jose Luis Gonzalez

By Gus Trompiz and Naveen Thukral

PARIS/SINGAPORE, June 6 (Reuters) - Chicago wheat climbed over 2% on Tuesday to a near three-week high as a breach in a dam in southern Ukraine heightened worries about an escalation in the war between major grain exporters Ukraine and Russia.

Millions of litres of water burst through a hole in the Russian-controlled Nova Kakhovka dam, which holds water equal to that in the Great Salt Lake in the U.S. state of Utah, threatening scores of villages and cutting off water supplies.

That added to supply worries in wheat as dry weather grips part of Europe and Russia that had fuelled gains in U.S. and European futures on Monday. GRA/

"This morning, prices are sharply up again in response to the escalating situation in Ukraine, particularly the blowing up of the Kakhovka dam," brokerage Copenhagen Merchants said in a note.

"With funds heavily short in wheat and corn, we may expect a volatile trade ahead."

The most-active wheat contract Wv1 on the Chicago Board of Trade (CBOT) was up 2.8% at $6.41-1/4 a bushel at 0831 GMT, after touching its highest since May 17.

CBOT corn Cv1 was up 1.0% at $6.03-1/2 a bushel, while soybeans Sv1 gained 0.3% to $13.54-1/2 a bushel.

The U.S. Department of Agriculture (USDA) rated 64% of the U.S. corn crop in good-to-excellent condition in its weekly crop progress report on Monday, down 5 percentage points from a week ago and below the lowest in a range of estimates in a Reuters poll.

After the market closed on Monday, the agency rated 62% of the soybean crop as good-to-excellent in its first 2023 condition ratings for the oilseed, below most trade expectations.

"Dryness in the U.S. is lifting corn and soybean prices, even though it is bit early as the crop has just been planted," a Singapore-based trader said.

Forecasts projecting showers around mid-June in the Midwest and tepid export demand for U.S. supplies were keeping corn and soy futures in check, traders said.

(Reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore; Editing by Subhranshu Sahu, Sherry Jacob-Phillips and David Evans)

((; +33 1 49 49 52 18; Reuters Messaging:

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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