(Bloomberg) -- Wheat briefly touched the highest in 10 months, as cold and dry weather in major producers and the ongoing war in Ukraine deepen supply concerns. 

Futures climbed as much as 3.3% in Chicago, before paring some of the gain. Analysts have been cutting production estimates for top exporter Russia in recent weeks, while Ukraine is headed for its driest May on record. Historically low rainfall in Western Australia is also adding to nervousness.

The US Department of Agriculture forecast global wheat stockpiles may fall to a nine-year low in the coming season, and hedge funds have been trimming net-bearish bets in the American market. Wheat futures in Paris have also been rallying, hitting the highest since March 2023.

SovEcon became the latest forecaster to cut its Russian wheat-harvest estimate on Tuesday, reducing its outlook to 82.1 million tons from a previous forecast of 85.7 million tons. It cited greater-than-expected damage to winter crops after May frosts. IKAR lowered its estimate on Monday.

Read More: Bad Weather and War Are Straining the World’s Wheat Supply

The rally is also being partially fueled by growers holding onto stockpiles as they wait for the dust to settle, said Ole Houe, chief executive officer at broker and adviser IKON Commodities. “Growers have all the power, and they are wielding it mercilessly,” he said, adding that when they decide to sell, demand may quickly wane.

Read More: Russia Clinches More Grain Control Just as Wheat Prices Spike

--With assistance from Áine Quinn.

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