(Bloomberg) -- Canola capped the week with the longest rally in more than three years and spring wheat gained as menacing drought and scorching heat puts North American crops at risk.
“It will be a hot and dry holiday weekend in the Northern Plains and northern Midwest,” Arlan Suderman, chief commodities economist at StoneX, said in a note.
While some isolated rains are expected in parched areas of North America, nothing has fundamentally changed in the weather to alter the bullish mood. Wild weather and tightening global grain supplies caused crop prices to soar earlier this week, threatening to worsen food inflation. Corn and soybeans ended the week with the biggest weekly gains in years, while canola set a new five-session benchmark.
The weather woes aren’t limited to heatwaves. Brazil is seeing corn damage from freezing temperatures.
Canola on the ICE Futures U.S. exchange rose for a 10th straight trading day, the longest rally since March 2018. The futures are at the highest price since at least 1982, according to Bloomberg data.
Trading volumes were light Friday ahead of U.S. Independence Day celebrations. The surge in crop prices earlier this week amid worry over tight supplies and menacing drought led some traders to unload positions prior to the three-day weekend.
Spring wheat in Minneapolis ended the week up 3.8% at $8.3875 a bushel. The futures have risen 38% during the past three months.
In Chicago trading, soybeans had their biggest weekly price gain since 2005 and settled at $13.99 a bushel. Corn had its biggest weekly gain since 2012, ending at $5.7975 a bushel. The increases came amid weather concerns and after the U.S. Department of Agriculture surprised the market on Wednesday with much lower-than-expected acreage estimates.
Tight global supply balances amid record demand from China leave little room for error in northern hemisphere harvests this summer.
Now China’s Wheat Imports Are Surging Too as Rain Spoils Harvest
“A couple of rain events are likely over the next week, week‑and‑a‑half,” said Tobin Gorey, a strategist with Commonwealth Bank of Australia. “Forecasters though are offering no comfort that the rain will arrest a drop in yields in that area.”
Trading will be closed Monday for the U.S. Independence Day holiday.
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