July 27, 2010

US grain prices slump as rain revives crop prospects

Corn fell to the lowest price in three weeks, soy dropped the most since June and wheat declined for a second session on signs that rain is reviving US crops threatened by dry weather earlier this month.

Weekend rain significantly boosted soil moisture in dry areas of the Midwest and South, said Drew Lerner, the president of World Weather Inc. in Overland Park, Kansas. Forecasts call for showers and no sustained heat over the next two weeks, which will be good for crops, Lerner said.

Corn futures for December delivery fell 6.5 cents, or 1.7%, to US$3.78 a bushel on the Chicago Board of Trade, after touching US$3.7575, the lowest level for a most-active contract since July 1. Before today, the commodity gained 12% since June 29, the day before the government said US farmers planted less this year than they had planned.

Soy futures for November delivery slipped 15.5 cents, or 1.6%, to US$9.66 a bushel, the biggest drop for a most- active contract since June 4. The price fell 0.4% last week on speculation that rain would revive crops.

Wheat futures for September delivery fell 6.75 cents, or 1.1%, to US$5.895 a bushel, the largest decline since July 16. Before today, the grain rose 39% since June 9 as drought damaged crops in parts of Europe and Russia and too much rain in Canada reduced the area planted this year.

Meanwhile, about 72% of the US corn crop was in good or excellent condition as of July 18, compared with 71% a year earlier, the government last week. An estimated 67% of soy was good or excellent last week, unchanged from a year earlier. US farmers harvested record yields last year.

Spring wheat was rated 82% in the top two categories in the week ended July 18, up from 73% a year earlier.