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Soybeans Rally to 12-Week High, Corn Gains as Dry Spell Hurts World Crops
Soybeans jumped to a three-month high and corn rose for a third day as hot, dry weather damaged crops from Russia to Germany, boosting demand for supplies from the U.S., the world’s largest grower and exporter.
Russia, the seventh-largest feed-grain exporter and oilseed processor, declared emergencies in 27 crop-producing regions, four more than a week ago, as drought harmed crops across at least 10.3 million hectares (25.5 million acres). German grain production will fall as much as 11 percent to 44 million metric tons from last year, Alfred C. Toepfer International GmbH said.
“People have underestimated the damage and the crops are still shrinking,” said Mark Schultz, the chief analyst for Northstar Commodity Investment Co. in Minneapolis. “There is a tightening global supply, and that means more U.S. exports.”
Soybean futures for November delivery surged 17 cents, or 1.7 percent, to close at $10.05 a bushel at 1:15 p.m. on the Chicago Board of Trade, after rising to $10.07, the highest price since April 27. The most-active contract gained 2.4 percent for the week and 11 percent in July, the biggest monthly rally since May 2009.
Corn futures for December delivery rose 13 cents, or 3.3 percent, to close at $4.0675 a bushel on the CBOT, after touching $4.07, the highest level since July 16. Corn advanced 5.8 percent for the week and 8.9 percent in July, the largest monthly increase since February.
Weather Threat
Prices also rose as heat and excessive rain threaten U.S. crops, Schultz said.
From Texas to Pennsylvania, temperatures will be as much as 6 degrees Fahrenheit higher than normal over the next two weeks, increasing stress on plants, said Gail Martell, the president of MartellCropProjections.com in Whitefish Bay, Wisconsin.
In the Midwest, the main U.S. growing region, the total rainfall during the past two months was probably the highest since 1960, after as much as 6 inches (15 centimeters) of rain moved east from South Dakota to Illinois in the past 24 hours, said Mike Tannura, the president of T-Storm Weather in Chicago.
The data point to the warmest and wettest June-July period since 1960, Tannura said today in a report to clients. With forecasts for a hot August, there is increasing potential for large swings in yields, he said.
“Too much rain and warm evening temperatures have caused widely variable crop conditions across the Midwest and in individual fields,” Northstar Commodity’s Schultz said. “It’s still going to be a good crop, but not as big as farmers were hoping for just three weeks ago.”
Corn is the biggest U.S. crop, valued at $48.6 billion in 2009, followed by soybeans at $31.8 billion, government figures show.
To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net
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