U.S. grains: Corn, soy climb on weather jitters ahead of weekend

(Scott Bauer photo courtesy ARS/USDA)

Chicago | Reuters — U.S. corn futures rose nearly three per cent on Friday and soybeans more than two per cent on broad strength in commodities and uncertainty about Midwest crop weather, analysts said.

Wheat followed the higher trend, rebounding on bargain buying after a six-session slide.

At the Chicago Board of Trade, July corn settled up 12-1/2 cents at $4.37-3/4 per bushel (all figures US$). July soybeans ended up 25 cents at $11.59-1/2 a bushel and July wheat rose 8-3/4 cents at $4.81-1/4 a bushel.

Corn advanced as traders covered short positions ahead of the weekend, with the crop approaching its crucial pollination stage in July. Forecasts called for patchy weekend showers in the northwest Midwest but some areas might not get rain, raising concern about crop stress.

“From Quincy, Illinois, all the way to Grand Island, Nebraska, that would be the area that would suffer,” said Mark Schultz, analyst with Northstar Commodity Investment.

The U.S. Department of Agriculture has projected U.S. corn supplies to rise above two billion bushels by the end of the 2016-17 marketing year, based on the government’s current average yield forecast of 168 bushels per acre.

But projected stocks could tighten quickly, given improving export demand and a modest drop in yield.

“You can’t afford to have a bean crop go under 44 bushels per acre on a national yield, and you can’t afford to have corn go under 160. It doesn’t have to be a drought; you just can’t afford to have it go beneath there, or you are going to see sharply higher prices,” Schultz said.

CBOT soybeans got a boost after the USDA confirmed export sales of 524,000 tonnes of U.S. soybeans in the last day, including 129,000 tonnes to China and 395,000 tonnes to unknown destinations.

Schultz said the sales indicated that supplies in top global soy exporter Brazil were running low.

“To get beans, more business is going to come to the U.S. much sooner,” Schultz said.

In a monthly report issued last week, the USDA raised its forecasts of U.S. corn and soy exports in the 2016-17 marketing year.

Strength in other commodities such as crude oil spilled into grains. The 19-market Thomson Reuters CoreCommodity CRB Index climbed 1.8 per cent as the dollar fell and investors cautiously bought some riskier assets as anxiety eased about Britain’s possible exit from the European Union.

“Money flow remains supportive of the broader commodity indices, particularly those weighted heavier toward the energy sector,” INTL FC Stone chief commodities economist Arlan Suderman said in a client note.

CBOT wheat followed the higher trend, with the July contract rallying on bargain-buying after a six-session slide. The wheat market has been anchored by the expanding U.S. winter wheat harvest and record-large world supplies.

— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Gus Trompiz in Paris.

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