July 15, 2010
CBOT grain futures rally on weather concerns
Chicago corn and soy futures climbed on Wednesday (Jul 14) on speculations that the hotter and drier US Midwest weather in late July and August may pose a threat to the developing crops.
Wheat futures hit a six-month high as adverse weather condition in Russia and Europe resulted in crop forecast cuts.
September wheat surged 9.75 cents, or 1.8%, to US$5.59 per bushel, the price once reached its highest price since January 14. December corn surged 9.25 cents, or 2.4%, the biggest gain since July 7, to US$3.9625 per bushel. November soy was up 7.5 cents, or 0.8%, to US$9.62 per bushel, the price once reached US$9.67 per bushel, the highest level since May 13.
Dollar slipped against euro, and once hit 2-month lows on Wednesday, as the disappointing US retail sales data ignited investors' worries that the US economic recovery may be losing momentum. The sharply lower dollar has set the positive tone for grain markets.
"The grain markets look solid right now, continue to close under highs, part of the impact can be attributed to the dollar index which is selling off and supporting dollar denominated assets, so the dollar continues to down below 84 level which is positive, we got hot weather in the forecast and outside markets continue to hold their gains," said Alan Knuckman, from Agora Financial.
The trader suggested that the dry and hot weather in US Midwest right now may seem to be near-perfect for pollinating corn and developing soy crops, but the forecasts of hotter and drier weather next week and into August may damage crops and reduce output in the US.
