Wheat and soya rally

US wheat futures rose for the sixth day in a row on Monday, peaking at an 8-1/2 month high, as forecasts for a prolonged dry spell in key growing areas threatened to cut the size of this year's harvest, traders said. "We are seeing some people talk about maybe a 50 million to 60 million bushel reduction in winter wheat production based on the heat of the last two weeks plus the fact that it looks like its going to stay hot for the next 10 to 14 days," said Mike Krueger, president of The Money Farm.
"It is generally weather, weather across US wheat areas and overseas." Soyabean futures also rose, led higher by the deferred months as traders unwound bull spreads due to worries that the hot weather could hinder development of recently seeded crops. Corn was mixed, with the front-month contract falling while deferreds followed soyabeans and wheat higher. Traders noted some profit taking on the benchmark contract that has risen recently due to tight supplies at country elevators and processors.
"We are betting on the weather at this point," said Jonah Ford, senior analyst for Ceres Hedge. "The bullish bias is coming in and it's driving those spreads. We are way ahead in planting progress across everywhere. That is going to make it (the market) really sensitive if we suddenly turn hot and dry." At 1:44 pm CDT (1844 GMT), CBOT November soyabeans were up 16 cents at $13.04 a bushel. The front-month July soyabean contract gained 5-3/4 cents to $14.10-3/4 a bushel.
CBOT July soft red winter wheat gained 6-3/4 cents to $7.02 a bushel. CBOT wheat climbed as much as 3.8 percent in Asian trading to hit $7.22 a bushel, its highest since September 7, 2011. CBOT December corn was 3-3/4 cents higher at $5.40-3/4 a bushel while old-crop July was 4 cents at $6.31-1/2 a bushel.
"You have got some weather issues that are starting to creep up that are more supportive to the new crop than the old," said Jim Gerlach, president of A/C Trading, a brokerage in Fowler, Indiana. "You have got an extraordinary amount of length in those front-month contracts. People are just exiting those and moving out to the new crop, especially if they think there is some kind of threat to the new crop."
The US Plains hard red winter wheat region will see "very limited rainfall for the next week to 10 days", said John Dee, meteorologist for Global Weather Monitoring. High temperatures are expected to reach the 80s Fahrenheit to low 90s F in the US crop belt over the next week or two.