Crop traders extend bull run as rain comes too late

Corn and soybean traders extended their longest bullish outlook in at least 11 months on speculation rain in the U.S. will come too late to revive crops after the worst drought in a half century.

Seventeen analysts surveyed by Bloomberg said corn will climb next week. A further six were bearish and four were neutral. Twenty expect gains in soybeans, four saw a drop and four predicted little change. The 19th straight bullish outlook is the longest run for corn since September and for soybeans since June 2011. Hedge funds’ bets on a rally in corn are the most in 16 months and near the largest for soybeans since at least 2006, U.S. Commodity Futures Trading Commission data show.

The worst U.S. drought since 1956 and dry weather in Eastern Europe and Russia drove corn to a record $8.49 a bushel this month. Food prices tracked by the United Nations rose the most since 2009 in July. Rain in the Midwest may be too late to improve yields because farmers already started the corn harvest and soybeans are reaching maturity. Credit Suisse Group AG said Aug. 29 the rally will to continue for several more months.

“The crop needed these rains a month ago,” said Christopher Gadd, an analyst at Macquarie Group Ltd. in London. “We expect to see prices of corn move closer to $9 a bushel. The situation for soybeans looks far more difficult because demand remains resilient at these levels.”

Crops Rally

Soybeans advanced 45 percent to $17.5275 on the Chicago Board of Trade this year and set a record yesterday. Corn gained 23 percent to $7.9725, reaching an all-time high Aug. 10. The Standard & Poor’s GSCI gauge of 24 commodities added 4.4 percent and the MSCI All-Country World Index of equities rose 7.5 percent. Treasuries returned 2.3 percent, a Bank of America Corp. index shows.

Areas of central Illinois and Indiana had as much as 3 inches of rain in the past two weeks, twice the normal amount, National Weather Service data show. Some Midwest regions received less than half of normal rainfall in the past 90 days. Tropical Storm Isaac may bring more than 4 inches of rain to areas of Illinois, Missouri and Indiana in the next five days, with smaller amounts stretching from southeast Iowa to Ohio, according to the service.

Corn production will drop 13 percent to 10.779 billion bushels this year, the lowest since 2006, and the soybean crop may be 12 percent lower at 2.692 billion bushels, the U.S. Department of Agriculture said Aug. 10. The agency updates its forecasts Sept. 12.

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