US corn futures rose nearly 1 percent in early Asian trade on Friday as a weaker dollar and a strong rally in crude oil prices to above $141 a barrel revived demand for grains. US crude oil futures surged 4 percent to above $141 a barrel, stirred by news of Iran testing missiles for a second day and worries about the potential for more militant action in Nigeria.
The dollar fell against a basket of currencies, weighed down by renewed credit worries, after shares in major mortgage firms Fannie Mae and Freddie Mac tumbled. "The renewed rally in oil prices is boosting demand for alternative energy and its major feedstocks, such as corn, are showing a solid performance," said a trader at Woori Futures. At the Chicago Board of Trade, July corn futures rose 0.85 percent to $6.81 a bushel.
But favourable crop weather continued to pressure prices of corn and soybean, which hit record highs in June and July when the worst flooding in 15 years hit the US Midwest, raising concerns over tighter global grain supply.
Weather forecasts called for mostly mild growing conditions in the US Midwest for the next several days, which should give corn and soybean crops a boost. Weather is the focus of the corn market since the crop pollinates in July, a critical phase in determining yield. Soybean received some support ahead of USDA's Friday update on its ending stock estimates, amid projections for tight US soybean stockpiles in the coming year.