Corn and soyabean futures rose on Tuesday, boosted by a downgrading in the condition of US crops and forecasts of renewed heat in the key growing region. Dealers said the weakness of the dollar also provided support with the US currency sinking to a record low against the Swiss franc on Tuesday.
US corn and soyabean crops wilted in scorching conditions last week - with corn ratings showing their biggest weekly drop in four years - as a heatwave settled over the US Midwest and stressed plants that already were behind in their development due to late planting.
"I think they (prices) are bouncing off the crop condition report which was released by USDA yesterday which confirmed the continued deterioration of the corn and soyabean crop in the US," Rabobank analyst Erin FitzPatrick said. Forecasts also suggested further heat in the next few days in the US corn belt.
"An increase in hot, dry weather will increase stress to the pollinating and shallow root crops," Telvent DTN said in a report on Tuesday on Midwest corn prospects. FitzPatrick said private forecasters have been downgrading projections for this year's US corn crop. Chicago Board of Trade (CBOT) corn for December delivery rose 0.6 percent to $6.78-1/2 per bushel by 1124 GMT while November soyabeans climbed 0.6 percent to $13.80-1/4 a bushel.
"Much of the focus is on yields as there will be a few private forecasts out next week and there is a pretty wide range of forecasts on corn yields as well as beans," said Brett Cooper, senior manager, markets, for FCStone Australia. Wheat prices also rose, boosted mainly on strength in the corn market. FCStone's Cooper said US wheat exports were under pressure from cheaper Russian wheat.
US wheat prices are forecast to end 2011 lower than previously expected, a new Reuters poll showed, reflecting competition from Russia's return to the global export markets. CBOT December wheat rose 0.55 percent to $7.33 a bushel while November milling wheat in Paris climbed 0.8 percent to 192.75 euros a tonne. In Australia, the world's fourth largest wheat exporter, the outlook for the 2011/12 harvest is bright with the government predicting a crop of 26.2 million tonnes, after a record 2010/11 harvest of 26.3 million tonnes. Production in Australia is likely to be boosted by a much larger harvest in Western Australia, typically the country's top grain exporter. The harvest in the state, which produces high-quality milling grain, is likely to double to around 9 million tonnes this year following ideal crop weather, traders told Reuters at an industry conference in Melbourne.