Chicago Board of Trade Wheat Futures hit a 12-week-high on Friday, as the escalating tensions between Russia and Ukraine inflicted increased uncertainty over Black Sea exports.

Traders have focused their attention on the Black Sea, after Ukraine, which is a major supplier of wheat and corn, accused Russia, on Thursday, of using strategic aircraft to attack a civilian grain ship in waters near NATO-member Romania. Russia, which is the largest wheat exporter in the world, declined to make any comments.

Weather risks have also affected wheat markets, as dry weather has hindered winter wheat sowings in Russia and Ukraine. Traders said that the decline in the dollar helped to support CBOT Futures as it made U.S. crops more attractive for importers.

FuturesOne commodity broker Matt Wiegand said, "When we react to world events sometimes, it's very fleeting."

The dollar is cheaper and there are questions about production. This, combined with structural factors, will keep the wheat market in a good place for now.

CBOT December Wheat rose 16-1/4 Cents to finish at $5.94-3/4 per bushel. On a continuation chart, the most-active contract rose 4.9% in one week and reached its highest since mid-June.

Wiegand noted that the gains also helped support the corn market in its immediate vicinity, which has also been boosted by recent U.S. sales abroad and domestic demand for ethanol.

He said: "It is certainly supportive until harvest really gets rolling so we can put a lot bushels on top."

CBOT corn increased 7-1/4 cents per bushel to $4.13-1/4, while soybeans fell 4-1/2 cents per bushel to $10.06-1/4.

Traders said that the approaching corn and soybean harvests in the United States weighed on futures prices. USDA raised its U.S. Corn Yield Forecast on Thursday, surprising analysts that had expected it to be revised downward after the dry weather.

USDA will release an update on the harvest of corn and soybeans in its weekly progress report, which is scheduled to be released on Monday.

The monthly

U.S. Soybean crush

Analysts said that the number of oilseeds processed in August likely dropped by over 6% as processors idled their plants prior to harvest. The report from the National Oilseed Processors Association is due Monday. Reporting by Tom Polansek, Chicago. Gus Trompiz and Mei Mei Chu contributed additional reporting from Paris and Beijing, respectively; Margueritachoy and Cynthia Osterman edited the story.

(source: Reuters)