August 31, 2010

CBOT corn soars amid unfavourable weather

Corn futures rose to a 14-month high on August 30 as dry weather damages crops in the US.

Parts of Indiana got less than 5% of normal moisture this month, and large areas of Illinois, Ohio, Missouri, Michigan and Kentucky had less than 25% of the usual amount of rain, said Allen Motew, a meteorologist at QT Weather in Chicago. Temperatures averaged at least four degrees Fahrenheit above normal from Mississippi to Ohio in the past 30 days.

"The hot, dry weather is reducing yield potential," said Greg Grow, the director of agribusiness for Archer Financial Services Inc. in Chicago. "People are betting that the US yield will be smaller than the government forecast earlier this month."

Corn futures for December delivery rose 8.25 cents, or 1.9%, to US$4.4425 a bushel at 10:17 a.m. on the Chicago Board of Trade. Earlier, the price reached US$4.4525, the highest level for a most-active contract since June 15, 2009.

Futures were little changed last week after jumping 13% in the previous four weeks as Russia halted grain exports following the most-severe drought in at least 50 years.

Soy futures for November delivery rose 2.5 cents, or 0.2%, to US$10.285 a bushel. The price climbed 2.7% in the previous two sessions. On August 5, the oilseed reached a seven-month high of US$10.49.