- Drought in Dakotas and Montana is seen intensifying; there are also unfavorable crop conditions and growing wildfire concerns.
- Analysts say short-covering by funds in wheat also is supporting prices.
- Minneapolis-traded spring wheat futures rose nearly 6 percent while Chicago oat futures were up as much as 8 percent during the session.
Wheat futures soared Monday as a worsening drought in the northern U.S. Plains and tougher crop conditions in Canada renewed supply concerns.
Besides the drought, analysts say managed money short-covering in wheat along with commercial buying are helping to propel the market higher.
"We have continued hot and dry conditions for spring wheat, particularly Montana and North and South Dakota — and the weather pattern is not changing," said Brian Hoops, president and senior market analyst at Midwest Market Solutions, a commodity trading and marketing firm based in Springfield, Missouri.
Added Hoops, "In fact, it's intensifying as far as drought-like conditions. So the crop is being perceived as smaller and smaller."
Spring hard red wheat futures in the September contract last traded at $8.16 per bushel Monday on the Minneapolis Grain Exchange, a four-year high and up nearly 6 percent from Friday. It soared almost 16 percent last week and Monday represented its ninth straight session of gains.
Spring wheat grown in the Dakotas and Montana is a high-protein variety considered a premium quality by bakers and millers over the Chicago-traded soft white winter wheat. The high-protein grain is used in artisan foods such as hearth breads, rolls, bagels and pizza crust.