CHICAGO, Aug 26 (Reuters) – New-crop U.S. soybean futures soared to an 11-month high on Monday and corn touched a one-month peak as hot, dry weather threatened to cut output in parts of the U.S. Midwest.
Wheat jumped to its highest level in more than two weeks, buoyed by the gains in corn and soybean futures.
Forecasts for stressful weather rallied prices because corn and soybean crops are more immature than normal for this time of year, putting them at greater risk for damage. Soybeans are particularly vulnerable to dry weather as the crop is entering its key pod-filling stage.
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“The fact that you’ve got some 100-degree (Fahrenheit) temperatures forecast for the western belt and no rain for five days is scary,” Linn Group analyst Roy Huckabay said. “The forecast has got everybody spooked.”
Grain buyers hope large harvests this autumn will replenish corn inventories that are expected to reach a 17-year low by the end of the month and soy inventories projected at a nine-year low. Supplies are tight due to strong demand and a poor harvest last year, when the U.S. suffered the worst drought in more than half a century.
Hot, dry weather raises worries that supplies could remain scarce.
“The drought is fresh in peoples’ minds, and that is prompting some high amounts of fund participation in this,” said Sterling Smith, futures specialist with Citigroup.
Chicago Board of Trade December corn jumped 25-1/4 cents to $4.95-1/4 a bushel by 10 a.m. CDT (1500 GMT). November soybeans surged 57-3/4 cents to $13.85-3/4 a bushel.
“Like it or not, this market is going to be highly charged,” said Jerry Gidel, feed grains analyst for Rice Dairy.
DRY FOR TWO WEEKS
Key growing states like Iowa and Illinois will be “completely dry this week and very warm”, said meteorologist Don Keeney of MDA Weather Services. There is not much relief in the forecast for the next 15 days, he said.
Yet, harvests are still expected to be large.
Farm advisory Pro Farmer on Friday projected record U.S. 2013 corn production of 13.46 billion bushels, based on a yield of 154.1 bu. per acre, using data collected during last week’s four-day Midwest crop tour, plus other market variables. [ID: ]
The figures compare with the U.S. Department of Agriculture’s latest forecast of a 13.763 billion-bu. crop with a yield of 154.4 bu. per acre.
For soybeans, Pro Farmer forecast U.S. production at 3.158 billion bu., with an average yield of 41.8 bu. per acre – which would be the fourth-largest in history. The estimate is three percent below USDA’s current outlook for a crop of 3.255 billion bu. with a yield of 42.6 bu. per acre.
Chicago wheat also rallied, with the spot-month September contact climbing 23-1/2 cents to $6.58 a bu.
