The price of wheat rose nearly 3 percent Tuesday after a lack of rain left the winter crop in its worst condition in 26 years.
Wheat for December delivery gained 24 cents to finish at $8.73 per bushel.
The U.S. Agriculture Department reported Monday that 26 percent of the winter wheat crop was in poor to very poor condition and 33 percent was in fair to excellent condition as of Sunday. The agency said it's the worst conditions for this time of year since 1986.
It's still early in the season for winter wheat, which will go dormant during the winter before it emerges next spring.
Typically, there is little correlation between the fall condition of winter wheat and production. But long-range forecasts are calling for a dry winter for much of the wheat-growing region, which could hurt how much wheat is harvested next summer, Telvent DTN analyst Darin Newsom said.
The dry fall can be traced back to the drought that ravaged much of the nation's corn crop last summer. The U.S. Drought Monitor report said last week that 60.1 percent of the lower 48 states were in some form of drought as of Nov. 20.
Meanwhile, adverse weather in South America pushed up prices for soybeans and corn. It's been too rainy to plant both crops in Argentina. Some areas of Brazil have good conditions for corn while others have been too dry, Newsom said.
After the U.S. harvest, global supplies of soybeans and corn were smaller than expected, so companies that use the crops in their products have been hoping for good production from South America to make up the shortfall, Newsom said.
December corn rose 12.75 cents to finish at $7.60 per bushel and January soybeans gained 24.5 cents to $14.4925 per bushel.
Other commodity prices were mixed on positive U.S. economic news. The government said U.S. consumer confidence rose this month to its highest level in almost five years. And U.S. companies increased orders of machinery and equipment in October.
Benchmark oil fell 56 cents to end at $87.18 per barrel, heating oil fell 3.71 cents to $3.0094 per gallon, gasoline futures rose 0.58 cent to $2.7321 per gallon and natural gas rose 3.9 cents to $3.769 per 1,000 cubic feet.
In December metals contracts, gold fell $7.30 to end at $1,742.30 per ounce, silver dropped 15.6 cents to $33.981 per ounce, copper was unchanged at $3.5365 and palladium rose $7 to $668.20 per ounce. January platinum rose $7.50 to $1,618.50 an ounce.
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