Corn rallied to an 11-week high and soybeans touched the highest price since February on speculation that dry weather during the next two weeks will erode yields in the U.S., after a July heat wave damaged plants.
The next two weeks will have less rain than normal from Nebraska toIndiana, leaving about a third of the main growing areas in the Midwest too dry, Bethesda, Maryland-based Commodity Weather Group LLC said today in today in a report. Average temperatures in July were as much as 8 degrees Fahrenheit above normal, expanding drought conditions from the Great Plains to the Midwest,government data show.
“The fear is that supply is falling faster than demand,” Don Roose, the president of U.S. Commodities Inc. in West Des Moines, Iowa, said in a telephone interview. “Oppressive heat in July damaged crops, and now the dry weather is further reducing yields.”
Corn futures for December delivery rose 3 cents, or 0.4 percent, to settle at $7.70 a bushel at 1:15 p.m. on the Chicago Board of Trade, after touching $7.79, the highest for the most- active contract since June 9. Prices are up 77 percent in the past year, including 15 percent this month.
Soybean futures for November delivery climbed 23.5 cents, or 1.7 percent, to $14.47 a bushel on the CBOT, after touching $14.54, the highest for a most-active contract since Feb. 10.
Morgan Stanley lowered its estimates for corn and soybean yields in the U.S., citing unfavorable weather and poor crop conditions.
U.S. farmers will harvest a smaller corn crop than forecast by the government this month, the Professional Farmers of America newsletter said after sponsoring the 19th annual tour of Midwest fields in seven states last week.
About 12.484 billion bushels of corn will be harvested, less than the 12.914 billion forecast by the U.S. Department of Agriculture on Aug. 11, Pro Farmer said on Aug. 26. Soybean output will be 3.083 billion bushels, above the USDA’s projection of 3.056 billion, the group said, noting that the forecast was dependent on the crop getting rain in the next two weeks to finish filling beans in pods.
Corn is the biggest U.S. crop, valued at $66.7 billion in 2010, followed by soybeans at $38.9 billion, USDA data show.