(Businessweek) – Corn advanced for a third day, extending the biggest one-day gain in 10 weeks, on speculation that the U.S. Department of Agriculture will lower its production outlook for the world’s largest grower.
The USDA may pare its forecast for the nation’s harvest tomorrow to 13.983 billion bushels from 14.005 billion bushels last month, according to the average estimate of 20 analysts and trading firms surveyed by Bloomberg. Yesterday, corn prices rallied 4.2 percent on speculation hot weather in the U.S. would damage crops.
“The main drivers of the renewed price strength are short covering ahead of this Thursday’s July USDA WASDE report and concern that hot, dry weather during pollination could hurt U.S. corn-yield prospects,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia (CBA), wrote in a report, using initials for the World Agricultural Supply and Demand Estimates. Short-covering refers to investors ending bets on declines.
Corn for delivery in December gained 0.7 percent to $5.255 a bushel by 5:35 a.m. on the Chicago Board of Trade. Futures traded on volume that was 48 percent above the 100-day average for that time of day, according to data compiled by Bloomberg. Soybeans for November delivery rose 0.3 percent to $12.80 a bushel, after climbing 3.9 percent in the previous two sessions.
Parts of southern Illinois, the second-largest corn growing state, may see temperatures above 90 degrees Fahrenheit (32 degrees Celsius) today, National Weather Service data show. Areas of the western Midwest and central Great Plains were under a heat advisory, it said.
Wheat for September delivery rose 0.1 percent to $6.7825 a bushel in Chicago. Milling wheat for November delivery increased 0.3 percent to 197.25 euros ($252.81) a metric ton on NYSE Liffe in Paris.
