Corn jumped the most in 14 months and soybean futures rallied the most since 2011 as hot, dry Midwest weather threatens to erode crop yields in the U.S., the world’s biggest grower. Wheat also advanced.
Temperatures will average as much as 14 degrees Fahrenheit above normal during the next 10 days, with little rain expected in the Midwest, T-Storm Weather LLC said in a note to clients today. July and August will be the driest since 1936 in Iowa, Illinois and Indiana. Corn production will be 2.2 percent below the government’s forecast on Aug. 12, while the soybean harvest will be 3 percent less, Professional Farmers of America said Aug. 23, after a tour of crops in seven states last week.
“The weather is cooking the crop that the Pro Farmer tour already said was smaller than expected,” Mark Schultz, the chief analyst for Northstar Commodity Investment Co., said in a telephone interview from Minneapolis. “The hot, dry weather will knock down the corn and soybean crop potential daily.”
Corn futures for December delivery surged 6.5 percent to close at $5.005 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest gain for a most-active contract since June 25, 2012. Earlier, the price touched $5.0825, the highest since July 16.
Soybean futures for delivery in November jumped 4.6 percent to $13.895 a bushel on the CBOT, the biggest advance for a most-active contract since Oct. 11, 2011. Earlier, the oilseed rose by the 70-cent exchange limit to $13.98. Prices rose 5.5 percent last week, the third straight increase.
The U.S. Department of Agriculture has cut its corn-crop forecast three times in as many months, predicting production of 13.763 billion bushels. While that would be a record, it is down from 14.14 billion expected in May. On Aug. 23, Cedar Falls, Iowa-based Pro Farmer predicted the crop would be 13.46 billion.
Soybean output may fall below the government’s estimate of 3.255 billion bushels, reaching 3.158 billion, after planting delays and unusually cool, dry weather stunted growth, according to Pro Farmer, a farm adviser and newsletter producer.
“The market’s increasingly getting a bit nervous about the soybean crop,” Paul Deane, an agricultural economist at Australia & New Zealand Banking Group Ltd. (ANZ), said by telephone today. The forecast from Pro Farmer is “only adding to sentiment,” he said.
Rain for the Midwest will be blocked by a large ridge of high pressure over the next 10 days, increasing stress on more than half the U.S. crops, Gail Martell, the president of Martell Crop Projections in Whitefish Bay, Wisconsin, said in a report to clients today. Windy conditions will further accelerate moisture loss, reducing kernel and pod filling and lowering yield potential, Martell said.
Soybean-crop conditions declined in 14 of the top 18 producing states, and corn ratings declined in 11 states, the USDA said in a report today after the close of trading. About 58 percent of the soybeans were rated in good or excellent condition yesterday, down from 62 percent a week earlier, the USDA said. Corn rated in good or excellent condition fell to 59 percent from 61 percent a week earlier.
“Crop conditions continue to decline, and that trend is likely to continue with the extremely warm weather that is being forecast for the week ahead,” Bill Northey, Iowa’s secretary of agriculture, said in a release today. “Hot temperatures and dry soils can hurt yields on both corn at soybeans at this point of the season.”
Wheat futures for delivery in December rose 3.2 percent to $6.6675 a bushel in Chicago, the biggest gain since April 29.
To contact the editor responsible for this story: Steve Stroth at firstname.lastname@example.org