(Nasdaq) – U.S. grain and soybean futures advanced Monday amid renewed unease over forecasts for hot, dry weather in the U.S. Midwest.
Analysts have warned for months that too much heat and not enough rainfall could hurt crops at the end of the U.S. growing season if the transition from an El Nino to La Nina weather pattern continues. U.S. production problems would come after dry weather in Brazil has already reduced output for the key world corn grower, and while demand for U.S. supplies is expected to be strong.
“Weather is becoming an increasingly bigger factor in corn, beans and wheat,” said Kelley Fornoff, an agricultural marketing consultant at the Hueber Report, a futures brokerage in Sycamore, Ill. in an afternoon note to clients. Rainfall in Europe and “dry areas across the U.S. have some already worried about production meeting demand.”
Meanwhile, corn prices on Monday also were supported by slow farmer selling, with many U.S. growers still holding back large amounts of grain from the market on speculation that poor weather this summer could prolong corn’s rally, pushing prices higher.
Corn futures for July rose 9 cents, or 2.2%, to $4.27 1/4 a bushel at the Chicago Board of Trade, the highest closing price since July 16.
Soybean prices also climbed, rising as the specter of heat and dryness fueled uncertainty over U.S. oilseed crops. Rain-reduced harvests in South America and hopes for expanded U.S. export demand already have driven prices for the oilseeds more than 30% higher since March.
CBOT July soybeans gained 6 1/4 cents, or 0.6%, to $11.38 1/4 a bushel.
Wheat rallied to a seven-month high as speculative investors exited bets the market would continue to fall. Prices for wheat have languished for months because of ample global inventories and lackluster demand for U.S. supplies. Recently, however, strength in nearby corn and soybean markets and excess rainfall in Europe, a key grain-growing region, have prompted some investors to reconsider bearish positions.
Although domestic and global wheat reserves are set increase in the 2016-17 season, said Rich Feltes, vice president of research at RJ O’Brien in Chicago, the “trade appears more enamored with vulnerability of large managed fund short” and the deteriorating quality of this year’s European wheat crop.
CBOT July wheat gained 10 1/4 cents, or 2.1%, to $5.07 1/2 a bushel, the highest settlement price since Nov. 6.
