May 30, 2011

US grain prices close higher on weather concerns

The CME Group grain markets closed higher on Friday (May 27) on concerns about dryer weather.

The July corn futures settled 13 cents higher at US$7.58 1/2. The July soy contract closed five cents lower at US$13.79 3/4. The July wheat futures settled 5 1/4 cents higher at US$8.19 3/4. The July soymeal futures closed US$4.70 per short tonne lower at US$355.60. July soyoil ended US$0.09 lower at US$58.61.

In the outside markets, the NYMEX crude oil is US$0.19 per barrel higher, the dollar is lower and the Dow Jones Industrials are up 18 points.

Analyst Tim Hannagan said the mixed trading is expected ahead of a holiday weekend. "Traders are positioning, posturing and cutting risk especially with the weather change to drier this week."

Terry Roggensack at Hightower Report said a potential shift from cool and wet to hot and dry is the reason traders tried to break the market. "But, until traders know that the hot-and-dry weather is for just 10 days, not 40 days, there will be strong underlying support," Roggensack said.

Some rains in the forecast for France and good weather for planting US crops next year are short-term bearish forces, he said. However, poor US or European weather for June would suggest sharply higher trade for corn, wheat and soy.