Drought lifts wheat as soybeans firm

Chicago wheat futures advanced for a third straight session on Tuesday as drought damage across the US Plains kept traders focused on tightening prospects for the winter crop, even as forecasts for rainfall checked sharper gains.

The most-active wheat contract on the Chicago Board of Trade rose 0.8 per cent to $6.44-1/4 a bushel in early Asian trade, extending a rally that last week pushed prices to their highest level in two years. Soybeans edged up 0.1 per cent to $12.23-1/2 a bushel, holding near the strongest level since mid-March, while corn was unchanged at $4.85-3/4 a bushel.

Weather remains the central driver of the grains complex, with the hard red winter wheat belt in the Plains facing prolonged dryness at a critical stage of crop development. The winter crop, planted before dormancy and harvested from late spring into summer, is vulnerable to yield loss when moisture deficits coincide with heading and grain-fill periods. Traders said some of the expected showers may arrive too late for fields where drought stress has already reduced yield potential.

Crop ratings have reinforced concerns. Only 31 per cent of the US winter wheat crop was rated good to excellent in the latest weekly assessment, up slightly from 30 per cent a week earlier but still the weakest reading for this point in the year since 2023. Poor to very poor ratings stood at 37 per cent, sharply above the 18 per cent level recorded a year earlier. Kansas, the top winter wheat-producing state, has seen crop development move ahead of average, leaving plants more exposed to moisture stress if rainfall fails to rebuild soil reserves quickly.

“Dry weather hitting the US wheat crop and renewed tensions in the Middle East are giving support to grains and oilseeds,” a Singapore-based trader said. The comment reflected the broader link between crop weather, energy prices and food commodity flows, with crude oil strength often feeding into demand for vegetable oils used in biofuels.

The market’s upside was restrained by forecasts for widespread rain across parts of the grain belt through the week. The expected system could bring relief to some drought-affected wheat areas and improve planting conditions in other regions. Still, meteorologists and crop analysts cautioned that rainfall distribution will matter more than headline totals, as scattered showers may not fully offset months of dryness in the southern and central Plains.

Soybeans drew support from firm crude oil prices, domestic crush demand and export activity, though gains were limited by the pace of US planting and the scale of South American supply. Soybean planting reached 33 per cent of intended acreage by 3 May, five points ahead of last year and 10 points ahead of the five-year average. Emergence stood at 13 per cent, well ahead of the usual pace, indicating that early-season progress has been strong despite cold and wet interruptions in parts of the Midwest and Northern Plains.

Demand signals have remained mixed. The US soybean crush for the 2025/26 marketing year is projected at a record 2.61 billion bushels, supported by higher use of soybean meal and oil. Export expectations, however, have been capped by competition from Brazil, where the crop outlook has continued to expand. Brazil’s soybean production for 2025/26 is estimated at about 181.6 million tonnes, lifting expectations for ample exportable supply from the world’s largest soybean shipper.

Corn traded sideways as the market weighed strong early planting progress against weather disruption. Around 38 per cent of the US corn crop had been planted by 3 May, matching last year’s pace and running four points ahead of the five-year average. Emergence stood at 13 per cent, also above normal. Cold snaps and weekend frosts raised localised concerns for newly emerged crops, particularly in northern areas, but the broader planting window remains within comfortable limits.

Wheat’s rally has wider implications for global food markets because US hard red winter wheat is a benchmark for bread-making supplies. Black Sea exports, European weather and freight risks continue to shape international pricing, but the deterioration in US Plains conditions has shifted attention back to North America after a period of heavy focus on abundant Russian and Australian availability.