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.

The wheat markets are also grappling with weather concerns for Black Sea supplies, as droughts in Russia and Ukraine have hampered winter wheat sowing. Traders said that the fall in the dollar has helped to support prices as it makes U.S. crop 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.

On a continuation chart, the most active CBOT Wheat contract rose 12 cents to $5.90-1/2 per bushel at 12:30 pm CDT (1730 GMT). It reached its highest price in mid-June of $5.98-3/4.

Weigand noted that the gains also helped support the corn market in neighboring Canada, which benefited from U.S. sales to export and domestic ethanol demand.

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

CBOT corn rose by 6 cents, to $4.12 per bushel. Soybeans fell 6-3/4 cents, to $10.04 per bushel.

Traders said that the approaching corn and soybean harvests in the United States weighed down on futures price. USDA will release harvesting updates in its weekly progress report, which is scheduled to be released on Monday.

USDA raised its forecasts for U.S. Corn production and yields on Thursday, surprising traders that had expected a lower revision following dry weather. Reporting by Tom Polansek, Chicago. Gus Trompiz and Mei Mei Chu contributed additional reporting from Paris and Beijing, respectively; editing by Subhranshu Sahu and David Goodman.

(source: Reuters)