CHICAGO, — Chicago corn and soybean futures extended gains on Monday, relying on the lingering support as U.S. government cuts it projection for grain output last week due to the heat and drought in U.S. Midwest this July. Wheat jumped more than one percent, on strong demand from Saudi Arabia and U.S. weather concerns.
The most active corn contract for December delivery added 5.5 cents, or 0.8 percent, to close at 7.2 U.S. dollars per bushel. September wheat jumped 9.25 cents, or 1.3 percent, to 7.415 dollars per bushel. November soybean climbed 16.5 cents, or 1.2 percent, to 13.5125 dollars per bushel.
Corn and soybean markets continued to rally as U.S. Department of Agriculture sharply reduced their crop estimate in the U.S. to well below analysts’ previous expectation last week.
Meanwhile, the continued dry condition in eastern Iowa and west- central Illinois also helped support the early rally, and the upbeat outside market, such as a deep break in greenback and stronger performance of U.S. stock market also added to the positive tone.
"Traders there bought in anticipation of tonight’s crop progress number. As we head into August days, soybean fundamentals become much more important," said Linn Group grain market analyst Jerrod Kitt.
Traders said that worries have been intensified recently, as an unprecedented drought in the states of Texas and Oklahoma will prevent farmers from planting hard red winter wheat.
And some traders even predicted that the drought conditions will not be alleviated for planting the winter wheat crop in another 4-6 weeks, as the planting usually start as early as September.
Meanwhile, wheat also got a strong boost from the upbeat news that Saudi Arabia bought 660,000 tones of wheat from Australia, EU, Canada and the U.S. "Wheat saw some support overnight from Saudi Arabia finalizing their tender over the weekend. The purchase price was a little better than expected and did not include any Russian origin wheat," Kitt added.