U.S. soybean meal futures rose by the daily trading limit to a new contract high on Monday as processors scrambled to obtain scarce supplies of the oilseed. But new-crop U.S. corn futures fell for the fifth time in seven sessions as much of the Midwest benefited from weekend showers and more rain is expected at a time when corn is entering its most important stage of development, pollination.
The rally in soymeal comes as processors worry that soy supplies will run short ahead of the autumn harvest due to strong demand. Inventories of old-crop soybeans, which are crushed into meal used to feed livestock, are expected to drop to a nine-year low by Aug. 31.
Processors “keep bidding up the meal. They keep bidding up the beans,” said Tim Hannagan, a grain analyst for Walsh Trading. “They’re trying to find it.”
Chicago Board of Trade August soymeal closed up the daily, exchange-imposed limit of $20 at $502.40 per short tonne, topping the previous contract high of $484.70 from Friday.
August soybeans climbed 29-1/2 cents to $15.20-1/4 a bushel, while new-crop November soybeans jumped 14-1/2 cents to $12.88-1/2 a bushel.
Gains in new-crop soy futures trailed soaring nearby prices as farmers are expected to bring in a massive crop this autumn due to large plantings. Still, the crop’s critical development period is a few weeks off, fueling uncertainty about the size of the harvest.
Front-month soy prices needed to climb to slow demand for old-crop supplies ahead of harvest, said Terry Roggensack, grain analyst for The Hightower Report stocks and commodities forecast service.
“That’s quite the move, and we needed it,” he said about the rally in soymeal.
CRITICAL CORN PERIOD
Corn futures weakened on forecasts for favorable weather as the crop enters its most important period of development, pollination, according to traders. Food companies, ethanol producers and livestock producers are hoping a record-large crop will replenish inventories that are expected to drop to a 17-year low by Aug. 31.
The U.S. Department of Agriculture on Monday said 43 per cent of the crop was silking, the reproductive phase that occurs during pollination. That was above analysts’ expectations for 40 per cent but below the five-year average of 56 per cent, following planting delays in the spring.
The percentage of corn rated as good to excellent fell to 63 per cent from 66 per cent a week ago, according to USDA. Soybeans were rated 64 per cent good to excellent, down from 65 per cent a week ago. Analysts had expected a 1 to 2 point decline for each crop.
“The new-crop corn is strictly reacting to weather,” said Tomm Pfitzenmaier, an analyst for Summit Commodity Brokerage. “If it rains with widespread coverage, the corn price is going to continue to decline.”
CBOT September corn lost 3-1/4 cents to $5.40-3/4 a bushel, and new-crop December corn fell 2-3/4 cents to $4.98.
Wheat futures sagged, with the U.S. harvest finishing up and bringing new supplies into farmers’ bins. The USDA, in Monday’s crop progress report, said the winter wheat harvest was 75 per cent complete, in line with analysts’ expectations.
CBOT September wheat slipped 4-3/4 cents to $6.59-3/4 a bushel.