Corn Rises to Highest Price Since January, Soybeans Gain on Supply Concern
Corn rose to the highest price since January and soybeans jumped to a one-month high on speculation that adverse weather will reduce yields in China and Russia, boosting demand for supplies from the U.S.
China’s grain production this year may decline as much as 2 percent because of flooding in southern areas, the China Daily said today. Russia’s grain harvest may fall 18 percent from a year earlier because of drought and high temperatures, SovEcon said July 7. U.S. exporters sold 116,000 metric tons of soybeans for delivery before Aug. 31 to China, the Department of Agriculture said.
“The global crops are declining and that will boost demand for U.S. grain,” said Mark Schultz, the chief analyst for Northstar Commodity Investment Co. in Minneapolis. “The U.S. crops are also variable, increasing the concern from end- users.”
Corn futures for December delivery rose 7 cents, or 1.8 percent, to $3.9625 a bushel on the Chicago Board of Trade. Earlier, the price reached $3.975, the highest level for the most-active contract since Jan. 12.
Last week, corn jumped 6.7 percent after the government said U.S. farmers planted less than they intended this year.
Soybean futures for November delivery climbed 13.5 cents, or 1.4 percent, to $9.46 a bushel after touching $9.5625, the highest level since June 4. Yesterday, the price surged 3.6 percent, the most since Oct. 12.
As of July 4, about 71 percent of the U.S. corn crop was in good or excellent condition, down from 73 percent a week earlier. Parts of the Midwest got more than three times the normal amount of rain in the past 30 days, the USDA said this week.
An estimated 67 percent of soybeans had the best ratings, down from 75 percent three weeks earlier.
Prices also rose after National Oceanic and Atmospheric Administration said the majority of forecast models expected a La Nina, or cooling of central Pacific Ocean equatorial waters, to form by August, increasing the risk of a hot, dry finish to the U.S. growing season, said Peter Meyer, an agricultural products specialist for JPMorgan Chase & Co. in New York.
Excessive rain in the past month stunted root development, which means reduced yields if hot and dry weather develops during the next seven weeks, Meyer said.
“There’s a problem from too much rain,” which flooded parts of fields in Iowa and Illinois, the two biggest producers of the crops, Meyer said. “If we end up with a strong La Nina, that would cut yields.”
Corn is the biggest U.S. crop, valued at $48.6 billion in 2009, followed by soybeans at $31.8 billion, government figures show.
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