August 19, 2008
Weather concerns push up US grain prices

US grain prices increased on Monday (August 18, 2008) due to concerns of a turn to drier weather this week in the Midwest.


There is not much moisture in the forecast and it's dry in some areas in Ohio, Michigan, Indiana and Minnesota, according to Jerry Gidel, analyst for North America Risk Management Inc.


US corn and soy were planted late and were slow to develop early in the summer due to the Midwest flood in June. As a result, good crop weather is required in August through September if the US is to achieve bumper crop yields.


Corn prices increased 4 percent, while soy and wheat nearly rose by 4 percent. The global wheat market is also worried about the weather, including Australia, a large global wheat producer and exporter.


US corn for September delivery increased 25 cents per bushel to US$5.54-3/4, soy for September delivery went up 45 cents per bushel to US$12.56-1/2, while wheat for September shipment rose 35 cents per bushel to US$8.59-1/4.


Despite so, some crop specialists opined that the warmer and drier weather could be a boon to crop development instead.


"The crops will continue to fill under very little stress. This warmer weather could push crop development a little ahead," said Mike Palmerino of DTN Meteorlogix.


Traders also said the grain and soy markets were due for a bounce after each market fell sharply on Friday (August 15, 2008) amid a broad-based sell-off as the value of the US dollar rose. The US dollar value fell again on Monday (August 18, 2008), giving support to US wheat, corn and soy markets, but a trader predicts that the market will remain volatile.


The trade was awaiting results from an annual crop tour of the Midwest that will conclude on Thursday, and the crop scouts will gauge and impact of the late plants and ample moisture for the corn and soy crops.


Tour leader Chip Flory said a cloud of uncertainty hangs over this year's crop as it is more vulnerable than usual to harsh weather due to immaturity.

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