Relentless heat in the key US corn- and soyabean-growing areas drove benchmark Chicago corn futures higher on Tuesday, marking the golden grain's biggest eight-day advance in 3-1/2 years as drought brought worries about world grain supplies. Soyabean prices jumped to their highest levels since 2008, less than a dollar per bushel off that year's top, while US wheat hit its highest price in over a year, tracking corn's rally.
The hot, dry weather prompted analysts to reduce corn yield estimates, pointing to a smaller crop in the world's No 1 grower than had been expected. In a Reuters poll Tuesday - the day after the US Department of Agriculture (USDA) reported on crop conditions - analysts on average pegged the US corn yield at 153.4 bushels per acre, down from 157.3 bushels a week ago. The USDA on Monday slashed its condition rating for US corn to 48 percent good-to-excellent, down 8 percentage points from a week earlier. It pegged the soyabean crop at 45 percent good-to-excellent, compared with 53 percent a week ago. The long-range forecast offered some mild relief as cooler weather is expected next week in the US grain belt.
"There's something for the bulls and bears today, with the crop continuing to sink with the hot, dry conditions," said Don Roose, president and analyst at US Commodities in West Des Moines, Iowa. "The bears have something with a little bit of a possible change cooler in those way distant maps." Chicago Board of Trade December corn gained 18-3/4 US cents, or 2.9 percent, to $6.74-1/2 a bushel, just slightly below its fresh contract high of $6.76.
The benchmark December contract has gained 22.5 percent over the past eight trading sessions, the biggest corn advance in 3-1/2 years for a like period compared with spot-contract prices on a continuous chart. December corn has gained ground in seven of those eight sessions, picking up momentum after the rally looked to lose steam last Thursday.
The most active November soyabean contract rose to a contract high of $14.78 a bushel, while the spot month reached the highest price since July 2008. Nearby July soyabeans surged 40 cents, or 2.6 percent, to $15.72-1/4 per bushel. September wheat gained 26-3/4 cents, or 3.5 percent, to $7.99-1/4 a bushel, gaining spillover support from corn. On a continuation chart, front-month wheat climbed as high as $7.82 per bushel, its highest since June last year.