Chicago | Reuters –– U.S. corn futures climbed to their highest in more than two months on Tuesday as traders predicted the U.S. will cut its production estimate in a crop report due out Friday.
The U.S. Department of Agriculture, in the monthly report, may reduce its estimates for the average corn yield and for the number of acres of corn and soybeans that will be harvested, analysts said.
Traders are concerned about the sizes of the crops because grain prices have tumbled over the past year following massive harvests in 2014. Export demand has been weak because of stiff competition from other countries that also have large supplies.
“There are lots of reports of problems in the eastern Corn Belt and traders continue to believe that the USDA will be forced to drop their yield estimates,” said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage in Iowa.
Chicago Board of Trade December corn rose 1.2 per cent to $3.98-1/4 a bushel after trading to $3.99, the highest price for a front-month contract since July 24 (all figures US$). The gains followed a 1.1 per cent jump on Monday.
Soybean yields are generally coming in strong so far, traders said, and November soybeans added just 0.4 per cent to close at $8.88 a bushel.
December wheat jumped 2.1 per cent to $5.26-1/4 a bushel after trading to $5.27, its highest since Aug. 10.
Helping push wheat futures higher were worries about dryness in the Black Sea region and softness in the U.S. dollar, which makes U.S. wheat more competitive on the world market.
Export demand has been sluggish because other countries are offering cheaper grain on the world market. Russia, a major wheat trader, estimated its exportable grain surplus at 30 million tonnes.
For soybeans, competition from South America has hurt U.S. export sales. Rallies can make U.S. crops even less attractive for foreign buyers.
“With the U.S. harvest advancing so quickly with great yields, and producers in South America rolling out more beans acres, it’s tough to get overly excited about the upside,” said Kevin Van Trump, chief executive officer of Missouri consultancy Farm Direction.
Farmers had harvested 27 per cent of the U.S. corn crop as of Sunday and 42 per cent of soybeans.
— Tom Polansek reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Nigel Hunt in London and Colin Packham in Sydney.