September 21, 2010

Corn and soy futures surge on China's adverse weather

Corn futures rose to the highest price in almost two years and soy jumped to a 15-month high as a cold snap threatens crops in China, the biggest consumer of grain and oilseeds.

Freezing weather this week in northeastern China will reduce crop quality and output, after rains delayed planting, according to reports. Last week, cold damaged oilseed plants in Canada. Corn futures rose to a record on Monday (Sep 20) in China, and soy jumped more than 3%.

"The fear of Chinese crop losses is driving the markets higher," said Gregg Hunt, an analyst at MF Global Ltd in Chicago. China may be forced to import more corn and soy, including from the US, the world's largest grower and shipper, he added.

Corn futures for December delivery rose 2.25 cents, or 0.4%, to US$5.155 a bushel at 10:25 a.m. on the Chicago Board of Trade. Earlier, the price reached $5.2375, the highest level for a most-active contract since September 2008.

The commodity is heading for an eighth straight day of gains, which would be the longest rally since June 2008.

Soy futures for November delivery climbed 17.25 cents, or 1.6%, to US$10.8625 a bushel on the CBOT. Earlier, the oilseed reached $10.995, the highest level since June 2009. The price rose 3.7% last week, the most in two months.

Speculative buying also increased after the dollar weakened and crude-oil prices rose, Hunt said.

Corn is the biggest US crop, valued at US$48.6 billion in 2009, followed by soy at $31.8 billion, government figures show.