June 8, 2012

US corn futures rise on speculations of small crop

US corn futures climbed twice this week as worries remained that the US crop may be lesser than expected amid recent heat and dryness in the Midwest.

Moreover, soy and wheat futures also climbed.

About a quarter of the US Corn Belt, including sections of Illinois, Missouri and Iowa, will "hold onto dryness concerns" in the next two weeks as scattered rains miss some growing areas, Commodity Weather Group said in a report.

Temperatures next week may top 90 degrees Fahrenheit (32 degrees Celsius). Topsoil moisture in Illinois was 63% short as of May 27, the National Drought Mitigation Center said June 1.

"People are worried about disruption to supply," Tetsu Emori, a commodity fund manager at Astmax Co., said by phone from Tokyo. "If hot, dry weather persists in the next several weeks, that may cut production in the US"

Corn for July delivery gained 1.2% to US$5.745 a bushel on the CBOT by 1:09 p.m. London time. The price is up 3.5% this month. Soy for November delivery increased 0.9% to US$12.88 a bushel.

The US, the largest corn grower and exporter, may boost output to a record 375.7 million tonnes in the year from September 1, the predicted May 10. The agency is scheduled to update its supply forecast June 12.

Wheat for July delivery rose 0.7% to US$6.175 a bushel in Chicago. In Paris, November-delivery milling wheat was little changed at EUR205.75 (US$256.90) a tonne on NYSE Liffe after yesterday touching a two-week low.

Russia's wheat exports may plunge to 16 million tonnes in the year starting July 1, from 21 million tonnes a year earlier, as production declines, the USDA's Foreign Agricultural Service said in a report posted yesterday. The country was the third- largest wheat exporter in the 2011-12 crop year.

Rains in the next week in the former Soviet Union will ease dry conditions in eastern growing areas, while heat in western parts of the region may stress crops, Commodity Weather Group said.