(WSJ) – Corn and soybean prices rose, as forecasts for dry weather in the Midwest heightened concerns that the crops may not be able to develop normally.
Front-month corn prices for July delivery settled 0.8% higher, after climbing as much as 2.4% earlier in the day. The grain rose 2% this week.
Hot, dry weather in much of the U.S. heartland has strained corn and soybean crops, leading the U.S. Department of Agriculture to cut condition ratings in weekly reports and analysts to pare expectations for crop yields. The next few weeks will be important for corn, as the crop could face bigger losses if more rain doesn’t come during its pollination phase.
Corn-growing areas such as southern Indiana and southeastern Illinois have become “critically dry,” said Drew Lerner, president of private weather forecaster World Weather Inc. in Overland Park, Kan. “We’re so limited on soil moisture…that crop development has probably stopped or at least slowed greatly,” he said. “We’re in survival mode now.”
Corn for July delivery at the Chicago Board of Trade closed up 4.5 cents, or 0.8%, at $5.91 a bushel. Corn for December delivery, the contract most closely linked to supplies that will be harvested this autumn, rose four cents, or 0.7%, to $5.54 a bushel.
Front-month July soybeans rose four cents, or 0.3%, at $14.425 a bushel, and wheat, lifted by gains in corn, climbed 11.5 cents, or 1.7%, to $6.7325 a bushel.
Forecasters predict minimal rainfall across most of the Midwest next week. Cooler temperatures will help preserve soil moisture in eastern corn-belt states like Indiana and Ohio, but a lack of further rain ultimately will put more pressure on crops.
Dryness isn’t severe in all corn-growing regions. States such as Minnesota and North Dakota in the upper Midwest, and the northwestern edge of the corn belt, have received sufficient rain in recent weeks, creating healthy crop conditions. Worries about dryness have focused more on areas farther south and east, with particularly dry conditions developing around the area where Missouri, Illinois and Kentucky meet.
“Some people are talking about having planted corn in southeast Illinois in March and haven’t had an inch of rain total since then,” said Hugh Whalen, an analyst at MID-CO Commodities Inc., a brokerage in Bloomington, Ill. “Next week is going to be pretty important for a lot of the crop.”
Soybeans are grown in many of the same regions as corn, and analysts said some soy crops are stunted by a dearth of rain. But the key growing phase for soybeans falls later in the summer, so those crops don’t yet face as large a threat as corn does.
Soybeans have traded at elevated levels this year due to a production shortfall in drought-stricken Brazil and Argentina. Analysts have said the result could be heightened demand for U.S. soy exports, making traders sensitive to any threats to the U.S. soy crop this year.
Analysts have said wheat also has benefited from optimism about U.S. export demand, as dry weather has shrunk expectations for wheat output in key foreign producers like Russia and Australia.
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