Corn Rises to 14-Month High as Unusual Hot, Dry Weather May Hurt U.S. Crop
Corn rose to a 14-month high as hot, dry weather last month in the Midwest increased the chances of yield loss in the U.S., the biggest producer and exporter.
Some fields from southeastern Kansas to eastern Michigan received less than 50 percent of normal rainfall in August and temperatures averaged as much as 5 degrees Fahrenheit above normal, data from the Midwest Regional Climate Center show. On Aug. 10, the U.S. Department of Agriculture forecast record yields this year, based on conditions as of Aug. 1.
“Heat and dryness in the eastern and southern Midwest will lead to lower yields than the USDA forecast in August,” said Marty Foreman, an economist for Doane Advisory Services Co. in St. Louis. “It’s difficult to measure the extent of the damage, but it looks like we are headed for a tightening supply situation.”
Corn futures for December delivery rose 7.5 cents, or 1.7 percent, to close at $4.4675 a bushel at 1:15 p.m. on the Chicago Board of Trade, after touching $4.4725, the highest level for a most-active contract since June 2009. The price rose 8 percent in August as Russia, hurt by the worst drought in five decades, halted grain exports to protect domestic supplies.
U.S. corn production will reach 13.365 billion bushels, 1.9 percent more than 2009’s record crop, the U.S. Department of Agriculture said in an Aug. 12 report.
Prices also rose as speculators and investors increased bets the global economy will rebound, boosting demand for commodities, said Charles Sernatinger, a vice president with ABN Amro Clearing LLC in Chicago.
The Reuters/Jefferies CRB Index of 19 raw materials was up 1.6 percent, heading for the biggest gain since July 22. The MSCI World Index of equities surged the most since May. Treasuries tumbled after reports showing manufacturing in the U.S. and China grew faster than economists estimated.
Corn is the biggest U.S. crop, valued at $48.6 billion in 2009, government figures show.
To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net
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