Chicago wheat futures rose 'Monday on the back of higher oil prices, after U.S.-Iran negotiations collapsed. A potential U.S. Blockade of the Strait of Hormuz also heightened concerns over global fuel and fertilizer supplies.

Futures on corn and soybeans have also increased.

Chicago Board of Trade corn Cv1 gained 0.7% at $4.44 per bushel, and soybeans Sv1 increased 0.1% to $11.76-3/4. Soybeans traded at their highest level since mid-March earlier in the day, but corn and wheat have been falling in recent weeks due to expectations of an abundant supply. This was reinforced by last week's U.S. Department of Agriculture monthly?supply demand report.

Andrew Whitelaw, an agricultural consultant at Episode 3 in Canberra, explained that the global wheat supply was keeping the price gains under control.

He said that major exporters had plenty of stock, but added that higher input costs could crimp the production in the long run. Oil prices rose by 8% on Monday to $100 per barrel as the U.S. Navy prepared for a possible blockade of Iranian oil shipments through the Strait of Hormuz.

The high cost of?fuel and?fertilizer has led to the speculation that farmers around the world may?plant less?wheat, which uses more fertilizer than other crops. The USDA estimated last month that U.S. Farmers were likely to plant the smallest acreage of wheat this year, since it began recording data in 1919. Swathes of the U.S. Wheat Belt are also experiencing drought conditions. The U.S. wheat crop has been rated as good to excellent at 35%, which is a three-year-low for this time of the year.

(source: Reuters)