Wheat holds near 10-month highs as frosts threaten Russian supply

Chicago wheat futures rose on Tuesday and hovered near a 10-month high hit in the previous session after frosts damaged crops in Russia, reducing supply from the world's biggest wheat exporter.

Corn futures also gained as excessive moisture in the Midwest hampered US corn planting. Soybeans fell as the prospect of a strong US harvest offset floods in southern Brazil that are shrinking production.

The most-active wheat contract on the Chicago Board of Trade (CBOT) Wv1 was up 0.2% at $6.88-1/4 a bushel, as of 0233 GMT, after rising to $6.94 on Monday, its highest since last July.

CBOT corn Cv1 climbed 0.2% to $4.73-1/4 a bushel after reaching $4.76, its highest since December 2023. Soybeans Sv1 fell 0.5% to $12.14 a bushel.

All three contracts fell this year to their lowest levels since 2020 as speculators responded to plentiful supply by amassing bearish short positions.

But the prospect of tighter supply prompted funds to buy back many of those shorts. Wheat has risen around 30% from the lows earlier this year, with corn up around 17% and soybeans around 8%.

Unseasonal frosts struck Russia's southern cropping regions again over the weekend after dry weather had already begun curtailing yields.

Russian wheat export prices rose last week, and consultants IKAR cut their forecast for the country's wheat crop by 5 million metric tons to 86 million tons on Monday.

Traders are also watching a Russian military assault in Ukraine's Kharkiv region that sharpens the possibility of disruption to Ukrainian grain production and exports, said Commonwealth Bank analyst Dennis Voznesenski.

"Short-covering by speculators is exaggerating the price rise, driven by Russia's advances in Ukraine and downgrades to Russian production," he said.

"Time remains for Russian wheat conditions to improve and alleviate market anxieties," analysts at Rural Bank wrote in a note. "So we can expect markets to stay volatile in the short-term."