June 20, 2012

Hot weather sends corn prices soaring

US corn prices soared 3.5% on Monday (June 18) amid hot weather across the Midwest.

The blistering weather has sent temperatures above normal in parts of several states, including Indiana, Illinois, Ohio, Kansas, Nebraska and Iowa.

Recent USDA reports have shown deteriorating conditions in the corn crop. About 66% of the crop was rated in good-to-excellent condition for the week that ended June 10. That compared with 72% the previous week.

Traders questioned whether dry conditions would erode the quality of the crop and lead to a smaller harvest than has been expected.

If there isn't sufficient rainfall soon, yields could fall below 160 bushels per acre, predicted Mike Zuzolo, president of Global Commodity Analytics & Consulting LLC. That compares with the US Agriculture Department's recent forecast of 166 bushels per acre.

Corn for July delivery rose 20 cents to finish at US$5.995 per bushel. July wheat gained 20.75 cents, or 3.4%, to US$6.3025 per bushel and July soy increased 8.25 cents to US$13.8425 per bushel.

Other commodities were mixed as concerns persisted about Europe's debt crisis after Spain's borrowing rates hit levels that prompted other countries to seek bailout funding. It was an indication that investors were afraid Spain could default on its debt and require a bailout.