Chicago | Reuters — U.S. corn, soybean and wheat futures rallied on Tuesday, supported by concerns that crops will face stress from adverse weather during the next few weeks.
“The grains exploded out of the gates last night and remain double-digits higher… as forecasts turn hot and dry through mid-month,” Arlan Suderman, chief commodities economist at StoneX, said in a note to clients.
Reduced crop expectations in South America added support.
AgRural, a Brazilian agribusiness consultancy, on Tuesday announced a forecast reduction for the country’s second corn crop because of a severe drought, adding that yields are expected to touch a five-year low this season.
A rally in crude oil also bolstered crop markets by raising the prospect of stronger demand for biofuel.
Chicago Board of Trade July corn futures rose 32 cents to $6.88-3/4 a bushel (all figures US$).
CBOT July soybeans settled up 18 cents at $15.48-1/2 a bushel and July soft red winter wheat was 30 cents higher at $6.93-1/2 a bushel.
Persisting dryness in northern U.S. and Canadian crop belts could be accentuated by hot weather forecast later this week, threatening to stress much of the spring wheat crop and some corn and soybean crops.
“We could still turn this around with good weather at the end of the month and through pollination in early July, but for now, the market wants to put a risk premium back into price … just in case,” Charlie Sernatinger, global head of grain futures at ED+F Man Capital, said in a client note.
MGEX spring wheat for July delivery was 44 cents higher at $7.71-1/2 a bushel.
The Commodity Weather Group said in a daily note that stress could rebuild in over one-third of the U.S. spring wheat crop in the next two weeks, with around 15 per cent of corn and soybeans seen at risk from dryness.
— Reporting for Reuters by Mark Weinraub in Chicago; additional reporting by Gus Trompiz in Paris, Naveen Thukral in Singapore and Colin Packham in Canberra.