May 24, 2011
CBOT corn jumps to one-month high, wheat rises
CBOT corn rose 1.2% on Monday (May 23) to its highest in nearly a month, while wheat rose almost 1%, adding to last week's spectacular rally as harsh weather from the US to Europe and China threatened to squeeze grain supplies.
US farmers face a crucial decision in the coming days to abandon corn planting plans and switch to soy amid the smallest supply of corn in the world's top exporter in 15 years. Last week, July corn climbed more than 11%, its biggest weekly rise since October, while July wheat rose over 10%.
"It is highly likely that the farmer will not be able to finish corn plantings, so it's going to be very bullish for corn prices," said a Singapore analyst. "The weather is a key factor and the market is looking forward to the USDA's crop progress report."
CBOT July corn rose 1.2 % to US$7.68-1/4 a bushel, after touching a high of US$7.75 a bushel, the highest since late April.
CBOT July wheat rose 0.9% to US$8.14 a bushel and soy for July delivery rose 0.8% to US$13.90-3/4 a bushel.
The USDA will release later on Monday (May 23) its updated weekly plantings report. Last week, USDA said corn plantings stood at 63% complete, below the 75% five-year average seeding pace.
Rains and floods in the eastern and southern US Midwest have kept farmers out of the fields, leading to outlooks for a cut in corn acreage and yields because of late seedings.
US farmers were forecast to expand their corn planting intentions to 92.2 million acres - the most since 1944 - prompted by an 85% jump in prices since the start of May last year.
The wheat market, which has gained 65% since the start of May last year, has been supported by renewed concerns over supplies as a result of dry weather in Europe and China.
"Wheat is catching the attention of investors as production and harvest is going to be hit by dry weather not only in the US but also in Europe and China," the analyst said.
In the US, a drought in the Plains has reduced hard red winter wheat production, while wet weather in the Midwest was threatening to harm the soft red winter wheat crop. And there is not much hope this week with more rains forecast for soggy fields across the US Midwest.
"Wet weather this week will continue to cause significant delays to corn and soy planting in Indiana and Ohio where some corn acreage will likely not get planted," said Mike Palmerino of the Telvent DTN weather service.
"Wet weather in Illinois and the western Midwest will disrupt and delay soy planting." The soybean market was also supported by rains delaying harvest in Argentina. Showers in Argentina's farming areas caused some delays in the country's 2010-11 soy harvest, the government said in its weekly report on Friday, although most of the crop has already been brought in.
