Corn and wheat prices rising in US as worldwide weather takes its toll

corn on Chicago commodities markets rose 1.2 per cent on Monday to its highest in nearly a month, while wheat rose almost one per cent, adding to last week’s spectacular rally as harsh weather affecting Europe, the United States and China threatened to squeeze grain supplies.
By The Newsroom
Published 24th May 2011, 10:09 BST

US farmers face a crucial decision in the coming days to abandon corn planting plans and switch to soybeans amid the smallest supply of corn in the world’s top exporter in 15 years.

Last week, July corn climbed more than 11 per cent, its biggest weekly rise since October, while July wheat rose over 10 per cent.

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“It is highly likely that the farmer will not be able to finish corn plantings, so it’s going to be very bullish for corn prices,” said Ker Chung Yang, an investment analyst at Phillip Futures in Singapore.

“The weather is a key factor and the market is looking forward to USDA’s crop progress report.”

Chicago Board of Trade July corn rose 1.2 per cent to $7.68 a bushel after touching a high of $7.75 a bushel, the highest since late April.

July wheat rose 0.9 per cent to $8.14 a bushel and soybeans for July delivery rose 0.8 per cent to $13.90 a bushel.

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Last week the US Department of Agriculture said corn plantings stood at 63 per cent complete, below the 75 per cent five-year average seeding pace. Rains and floods in the eastern and southern US Midwest have kept farmers out of the fields, leading to an outlook of a lower corn acreage and yields because of late planting.

US farmers were forecast to expand their corn planting intentions to 92.2 million acres – the most since 1944 – prompted by an 85 per cent jump in prices since the start of May last year.

Analysts said they were not likely to be net sellers of corn futures at current price levels because of the uncertainty about crop planting.

The wheat market, which has gained 65 per cent since the start of May last year, has been supported by renewed concerns over supplies as a result of dry weather in Europe and China. “Wheat is catching the attention of investors as production and harvest is going to be hit by dry weather not only in the U.S. but also in Europe and China,” Chung Yang said.

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In the US, a drought in the Plains has reduced hard red winter wheat production, while wet weather in the Midwest is threatening to harm the soft red winter wheat crop. More rain is forecast in the Midwest for this week.

The soybean market is being supported by rains delaying harvest in Argentina.

Showers in Argentina caused some delays in the country’s 2010/11 soy harvest, the government has said although most of the crop is already in.

Related topics:EuropeChinaChicago