U.S. grains: Corn, soybeans extend rally as fundamentals improve

Chicago | Reuters — U.S. soybean and corn futures rallied on Wednesday, both posting their second straight day of sharp gains on concerns about hot and dry weather cutting into U.S. soybean crops and expectations of strong exports of U.S. corn.

“Soybeans are the main drivers of the grain market as traders continue to put in a premium with the expectation that the weather will turn hot and dry in late July and early August as soybeans begin to set pods,” CHS Hedging said in a note to clients.

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Wheat futures were mixed, with gains in corn contributing to a higher close in the Chicago Board of Trade soft red winter wheat contracts. K.C. hard red winter wheat and MGEX spring wheat closed steady to weaker, with prices pressured by a big U.S. winter wheat harvest and good conditions for growth in the northern U.S. Plains.

Chicago Board of Trade November soybean futures settled up 18-1/4 cents at $11.05-1/4 a bushel (all figures US$).

Weather forecasts called for rising temperatures and decreasing rainfall in the U.S. Midwest during early August, a critical time for soybean development.

Soybean futures have gained 4.7 per cent during the last two days, their biggest two-day jump since early June.

“We are seeing a continuation of Tuesday’s weather market today, with worry among investors that hot weather currently forecast could damage U.S. soybean crops,” said Frank Rijkers, agrifood economist at ABN AMRO Bank.

“A decent U.S. soybean harvest is needed by the world market to meet rising global demand for U.S. soybeans, especially from China, after soybean crop damage in Argentina earlier this year.”

CBOT December corn futures were up 9-1/2 cents at $3.69-3/4 a bushel. The most-active contract hit its highest since June 30.

U.S. corn supplies will tighten more than expected in the coming months due to rising exports, USDA said in its monthly supply and demand report on Tuesday.

CBOT September soft red winter wheat settled 1-1/4 cents higher at $4.39-3/4 a bushel.

Wheat’s gains lagged corn and soybeans due to plentiful global supplies and expectations that the big U.S. harvest will add to the glut. USDA raised its 2016-17 U.S. harvest estimate to 2.261 billion bushels. Russia is widely expected to harvest a record wheat crop this year, and favourable weather has been improving prospects in Ukraine.

— Mark Weinraub is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Michael Hogan in Hamburg and Naveen Thukral in Singapore.

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