Wheat futures advanced for the first time in three days after President Barack Obama announced that lawmakers have reached an agreement to raise the federal debt limit and avoid a default. Corn futures also increased.
December-delivery wheat gained as much as 1.1 percent to $7.2375 a bushel on the Chicago Board of Trade and was at $7.22 at 2:07 p.m. inSingapore. Futures climbed 17 percent in July.
Obama said in remarks at the White House late on July 31 in Washington that leaders of the Republican and Democrat parties have reached an agreement that will reduce the deficit. Without an agreement, the U.S. may have defaulted on Aug. 2.
“The early lift in the commodity complex certainly appears to be tied to the debt news that’s come out of the U.S.” said Luke Mathews, a commodity strategist at Commonwealth Bank of Australia. “The markets have responded very positively.”
Congressional leaders reached a bipartisan agreement to raise the $14.3 trillion debt ceiling through 2012. The plan aims to cut spending by about $1 trillion and calls for enactment of a law shaving a further $1.5 trillion from long- term debt by 2021 — or institute reductions across all government areas, including Medicare and defense, according to congressional officials.
Corn for December delivery advanced as much as 1 percent to $6.7525 a bushel. November-delivery soybeans rose as much as 0.8 percent to $13.68 a bushel.
Corn and soybean crops in reproductive and filling stages are likely to face increased stress in the Midwest, as hotter, drier weather persist through the early part of this week, before showers and more seasonal weather returns later in the week, Joel Burgio, senior agricultural meteorologist at Telvent DTN Inc., said in a forecast July 29.
Corn and soybean crops in the U.S., the world’s biggest grower and exporter, will be less than the government forecast because of unusually hot, dry weather, according to Newedge USA LLC, a commodity researcher and brokerage.
Production of corn, the biggest U.S. crop, will total 13.062 billion bushels, less than the 13.47 billion estimated by the U.S. Department of Agriculture last month, Newedge said July 29. Yields may average 155.3 bushels an acre, compared with 158.7 bushels forecast by the government. Farmers harvested 12.447 billion bushels last year.
The soybean harvest will total 3.201 billion bushels, Newedge said, less than the USDA’s July forecast of 3.225 billion. Last year, farmers produced 3.329 billion bushels.