CHICAGO: US new-crop corn futures were headed for their biggest gains in more than two years on Monday as forecasts for more rain in what is already one of the wettest springs in history will delay plantings a year after drought sapped yields and reduced supplies in the world's largest producer and exporter.
Wheat and soybean futures also rose sharply, leading a broad commodities rally as the dollar eased. The Thomson Reuters Jefferies CRB index of 19 commodities gained 1 percent to its highest level in two weeks.
Corn futures for December delivery - the first contract to reflect the harvest of a new US crop - were up 28 cents, or 5 percent, to $5.52 per bushel, on pace for their largest one-day bounce since March 2011.
The most-active July contract surged 36-1/2 cents to $6.56-1/4 per bushel, increasing the premium over December futures to the most in three weeks as farmers held tightly to their old-crop supplies until they can plant their new crop.
"Sentiment has shifted from drought relief to the possibility of a major problem at the same time funds increased their net short position in corn. Significant amount of short-covering support to follow," said Ken Smithmier, analyst at the Hightower Report in Chicago.
Corn futures sank to a 10-month low earlier this month after the US Agriculture Department said farmers would plant the largest corn area since 1933.
Speculative investors, including hedge funds, liquidated their bullish bets in the weeks since the March 28 government crop report, last week expanding their net short stake in the market to the largest in three years.
Many investors were betting on return to beneficial growing conditions after last year's worst drought since the Dust Bowl reduced yields at harvest and pushed corn futures to a record last August.
USDA in March estimated the existing supply of the yellow grain as the smallest in nine years, with the new-crop harvest needed to replenish stockpiles.
But a late start to plantings will push back the harvest and also chill selling interest from farmers holding their grain in a price hedge in case of smaller yields.
Analysts polled by Reuters estimated US corn plantings at 9 percent complete as of Sunday, which would be sharply below last year's 53 percent and the slowest planting pace since 1993, after rain, snowfall and cooler-than-normal weather kept farmers out of the fields so far this spring.
USDA will update planting progress in a report due at 3 p.m. CST (2000 GMT). USDA last week showed corn planting at 4 percent done, the slowest since 2008.
"This weather is really going to clamp down farmer selling," said Rich Feltes, analyst at R.J. O'Brien in Chicago.
"Right now with this delay that now looks like it's going to marching into May as well - I think cash pipeline is going to thin out some more this week even though export demand is pretty sloppy and the end users are reluctant to take on any more old ownership than they have to, live day to day," Feltes added.
Drier and warmer weather early this week will allow US farmers to plant corn, but another round of showers is expected beginning near midweek, said John Dee, agriculture meteorologist for Global Weather Monitoring.
"We'll start out in OK shape, then late Tuesday into Wednesday rains begin in the west and spread to the east by Thursday and Friday," Dee said.
CBOT May wheat futures were 20-1/2 cents, or 3 percent, higher at $7.09-1/4 per bushel and CBOT May soybeans up 34-1/4, or 2.4 percent, at $14.65.
Wheat was underpinned by concerns that crop scouts on a tour this week will find freeze-damaged wheat fields in the top growing state of Kansas.
Crop scouts - agronomists, wheat buyers, millers and bakers - will survey wheat fields in Kansas in the annual Wheat Quality Council tour beginning on Tuesday.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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