Chicago grain futures rally as adverse weather may curb output
Chicago corn halted a 3-day losing streak, and jumped the most in a week on Wednesday, soybean price touched near 9-week high, on speculations that the hotter and drier U.S. Midwest weather in late July and August may pose a threat to the developing corn and soybean crops. Wheat hit a 6- month high as adverse weather condition in Russia and Europe resulted in crop forecast cuts.
September wheat surged 9.75 cents, or 1.8 percent, to 5.59 U.S. dollars per bushel, the price once reached its highest price since Jan. 14. December corn surged 9.25 cents, or 2.4 percent, the biggest gain since July 7, to 3.9625 dollars per bushel. November soybean was up 7.5 cents, or 0.8 percent, to 9.62 dollars per bushel, the price once reached 9.67 dollars per bushel, the highest level since May 13.
Dollar slipped against euro, and once hit 2-month lows on Wednesday, as the disappointing U.S. retail sales data ignited investors' worries that the U.S. economic recovery may be losing momentum. The sharply lower dollar has set the positive tone for grain markets.
"The grain markets look solid right now, continue to close under highs, part of the impact can be attributed to the dollar index which is selling off and supporting dollar denominated assets, so the dollar continues to down below 84 level which is positive, we got hot weather in the forecast and outside markets continue to hold their gains," said Alan Knuckman, from Agora Financial.
Trader suggested that the dry and hot weather in U.S. Midwest right now may seemed to be near-perfect for pollinating corn and developing soybean crops, but the forecasts of hotter and drier weather next week and into August may damage crops and reduce output in the U.S.. "Everybody is focusing on yield of production as we keep an eye on the weather obviously," according to Alan Knuckman.
Traders also noted that wheat surged on the speculations that Russian wheat crop production would be greatly hurt by the persisting heat-wave and drought in Russia, and the forecasts for wheat crops in Germany and Ukraine were slashed on Wednesday also suggested smaller crops in both countries.
The National Oilseed Processors' Association (NOPA) reported crushing 126.241 million bushels soybean in June, which was higher than analyst's expectations, and lifted soybean prices.
[Source: Xinhua, Chicago, 14Jul10]
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