Chicago Board of Trade (CBOT) corn futures turned higher on Tuesday in a recovery bounce after their biggest plunge in five weeks on Monday as U.S. farmers struggle to plant corn in muddy fields.
The pace of corn planting is the slowest pace in 29 years, a bullish market factor since it could result in lower yields. However, forecasts for better planting weather for next week was a bearish market factor.
“Weather forecasts look like farmers will get a couple bonus days of planting, they are getting some work done now so there is some progress,” said Shawn McCambridge, analyst for Jefferies Bache.
Wheat futures also rose after being dragged lower by corn on Monday and on declining conditions of the U.S. crop. Also, harvest risks emerged in Australia and the Black Sea region due to dry weather.
Soybean futures turned up on hesitant selling amid tight stocks of U.S. soy, firm cash markets and slow farmer selling.
Traders said the market focus was on corn because of the historically slow start to plantings.
Stalled by rain and late-season snow last week, U.S. farmers have planted just 12 percent of their intended corn acres, the slowest pace since 1984, the U.S. Department of Agriculture said in a weekly report.
“It looks virtually impossible for farmers to catch up the delay entirely by mid-May, when the window for corn planting closes. We therefore view yesterday’s price slide as exaggerated,” Commerzbank analysts said in a note.
Chicago Board of Trade July corn was up 3-1/2 cents per bushel at $6.40, July soybeans were up 13 at $13.82-1/4 and wheat for July delivery was up 6-1/4 cents at $7.09.
Corn prices have been buffeted in recent months by expectations of bumper crops in South America and the U.S. this year and by concerns about tight old-crop supplies due to the drought-hit 2012 U.S. harvest.
“We still have significant issues in the United States and those issues were reaffirmed last night in the weekly crop progress report,” said Luke Mathews, commodities strategist at the Commonwealth Bank of Australia.
“It is unlikely we are going to make up for the deficit in any significant fashion over the next couple of weeks which means there is a risk of lower area planted and in addition some possible yield penalties.”
Better corn planting weather is seen for the next week to 10 days in the U.S. Midwest but conditions will be less than ideal with widespread rains expected beginning Wednesday and continue into the weekend, an agricultural meteorologist said.
“The best window is the next day or two, then they will have to wait until next week… not the best of conditions but not a disaster either,” said John Dee, meteorologist for Global Weather Monitoring.
Wheat weather gains attention
USDA said 32 per cent of the U.S. winter wheat crop was rated in good to excellent condition, down from 33 per cent a week earlier and the lowest since 1996. The poorest ratings remained in the Plains states, which have struggled with drought as well as spring freeze damage.
Seedings of spring wheat, most of which is high-quality milling wheat produced in the northern Plains, continued to lag due to cold and wet conditions.
In North Dakota, the top U.S. spring wheat state, spring wheat planting was seven per cent complete, up from two per cent a week earlier but far behind the five-year average of 40 per cent.
Additional support for wheat was dry weather continuing to delay planting in Australia’s eastern grain belt, although output in the key western wheat region was set to rebound after favourable rain.
Dryness was a concern for crops in major Black Sea exporters Russia and Ukraine, which are recovering from drought last year than slashed harvest volumes.
In Ukraine, yields of spring barley and spring wheat may drop as much as 30 per cent if no rain falls on dry fields in the next two weeks, a senior weather forecaster said on Tuesday.
In neighbouring Russia, concern was centered on the south where continued dry weather could hurt yields in the country’s main wheat export region.
“I’m more focused on the problem of water stress in Russia than on the corn planting delays in the United States because the U.S. farmers will get their planting done in the end,” Michel Portier, head of French consultancy Agritel, said.
— Sam Nelson covers the CBOT grain and soy futures markets for Reuters in Chicago. Additional reporting for Reuters by Valerie Parent and Gus Trompiz in Paris and Naveen Thukral in Singapore.