GRAINS-Chicago wheat hits highest in nearly two years on drought concerns

By Heather Schlitz

CHICAGO, April 28 (Reuters) - Chicago wheat futures hit their highest point in nearly two years on a continuous chart on Tuesday, driven by strong demand and a potentially crop-killing drought in the U.S. winter wheat belt.

The most active wheat contract on the Chicago Board of Trade Wv1 settled 28 cents higher to $6.57-3/4 per bushel after hitting its highest point since June, 2024.

Corn Cv1 settled 6-1/4 cents higher to $4.75-1/2 per bushel while soybeans Sv1 settled 2-3/4 cents lower to $11.89-1/4 per bushel on a technical setback but remained near a six-week high.

Rainy weather in the U.S. Plains wheat belt could alleviate some of the drought stress on crops, but some areas may have already experienced yield loss. Upcoming rain is forecasted to miss other dry areas.

"The main driver of wheat is that hard red winter yields in Kansas are expected to be disappointing after dryness," said Randy Place, analyst at Hightower Report, adding that the market is not yet able to assess how much damage the drought has done. "We're trying to factor in how bad the yields could be before harvest."

The USDA rated 30% of the nation's winter wheat crop in good to excellent condition on Monday, unchanged from the previous week. Most analysts polled by Reuters had expected a slight decline.

Corn prices gained support from overly wet weather in the U.S. corn belt, solid export demand and higher crude oil prices. Expectations that farmers will plant less corn due to high costs of fertilizer have also supported corn futures.

Early U.S. soybean and corn planting has made good progress, though storms expected in the U.S. Midwest could delay seeding in some areas.

Oil prices extended gains on stalled efforts to end the U.S.-Iran war while the Strait of Hormuz trade route effectively remained shut. Corn and soybeans are key feedstocks for biofuels.