Corn futures extended a fourth weekly gain in Chicago, the best run since November, as drought in the U.S. worsens yield losses in a crop already in the poorest condition since 1988. Wheat and soybeans also rose.
December-delivery corn rose 2 percent to $7.47 a bushel on the Chicago Board of Trade by 2:01 p.m. London time. That took this week’s advance to 7.8 percent. The last time the most-active contract advanced four straight weeks or more was in the period to Nov. 4. Prices have rallied 18 percent this month and 48 percent since mid-June.
Areas in the U.S. Midwest suffering from moderate to extreme drought expanded to about 63 percent as of July 10 from 53 percent a week earlier, the National Drought Mitigation Center said yesterday. The U.S. government cut its outlook for the domestic corn crop, the world’s largest, by 12 percent on July 11, just a month after predicting a record harvest.
“The operators remain riveted to the weather forecasts, knowing that in the short term the models don’t forecast rain for the most vulnerable areas,” Paris-based farm adviser Agritel wrote on its website today. “The yield outlook inevitably remains penalized by the current conditions in this critical development phase.”
The U.S. Department of Agriculture cut its outlook for the corn harvest to 12.97 billion bushels (329.45 million metric tons) this year from a June prediction of 14.79 billion bushels. The forecast for global output was cut to 905.2 million tons from 949.9 million tons last month. Futures rose to $7.48 a bushel on July 11, which at that point was the highest price since Sept. 13.
“The drought condition is not expected to change,” Lynette Tan, an analyst at Phillip Futures Pte, said in a report e-mailed today. “Traders realized rains forecast in parts of the Midwest were too little to be of significant relief to the irreversible damage caused to the crop.”
China, the world’s second-largest corn user after the U.S., may import at least 8 million tons in 2012-13 from about 5 million tons in 2011-12, Jean Yves Chow, senior industry analyst at Rabobank International, said in an interview. Japan may import 16 million tons, up from 15.5 million tons, he said.
Wheat for September delivery rose 1.9 percent to $8.6325 a bushel, headed for a fourth weekly increase. Milling wheat for November delivery traded on NYSE Liffe in Paris advanced 2.3 percent to 260 euros ($316.58) a ton, the highest since the contract started trading in March 2011.
Soybeans for November delivery gained 1.5 percent to $15.52 a bushel in Chicago, also set for a fourth weekly gain.