Corn futures at the Chicago Board of Trade closed 2 percent higher on Tuesday on fresh weather worries in the United States and China, traders said. CBOT corn closed 1-1/4 to 8-1/4 cents per bushel higher, with July up 8-1/4 at $3.71-1/2 per bushel. Fund buying led the way up with fund purchases estimated at 5,000 to 6,000 lots.
"Dryness is creeping into the eastern Corn Belt," said Dan Cekander, analyst for FIMAT USA. The El Nino weather phenomenon has been giving the US Midwest good growing weather for several years. There are now signs of a switch to a La Nina pattern, which could lead to hot and dry weather this summer in key US crop areas.
There were some weather reports on Tuesday hinting at dryness in the Midwest, which could harm crops at a time that big production is needed to meet the growing demand from the green fuels sector mainly corn for ethanol and soyaoil for biodiesel. DTN Meteorlogix forecaster Joel Burgio said on Tuesday the eastern Corn Belt has been drying out and may stay dry over the next 10 days or so.
Additionally, worsening drought in portions of China, including China's key Henan grain growing province, added to the bullish momentum for grain and soyabean futures on Tuesday, the traders said.
China's Xinhua news agency said on Tuesday that rainfall in Henan province since March has been down 70 percent on the average for the last two years, with no significant rain expected this month. Traders said the USDA crop progress report released late on Monday that showed US corn plantings at 78 percent complete pressured the corn market early in the day.
The 78 percent pace was well above trade estimates of roughly 70 percent and also was equal to the five-year US corn planting pace. USDA also said 39 percent of the corn crop had emerged, up from the 36 percent five-year average.
Corn producers are trying to plant the largest land area to corn since 1944 to take advantage of 10-year-high prices as the demand for corn to fuel the ethanol sector forges ahead. Rain in the far western portion of the US Midwest was slowing plantings but overall good planting weather is seen elsewhere in the crop region, DTN Meteorlogix weather said on Tuesday.
Export activity overnight and early on Tuesday featured news that Taiwan feed makers will be seeking corn from Latin America amid soaring corn prices in the United States, a top feed association official said in Taipei on Tuesday.
Meanwhile, Israel is tendering for up to 56,000 tonnes of corn from the United States or South America. Cash basis bids in the Midwest were mostly steady amid slow farmer selling. Corn volume was estimated by the CBOT on Tuesday at 190,605 corn futures and 44,682 options. Oat futures closed up 4-1/4 to down 1/4, with July up 1-1/2 cents at $2.57-1/2 per bushel and September up 4-1/4 at $2.51-3/4. Oats volume was estimated at 999 futures and 28 options.