Corn jumped the most in 14 months and soybean futures rallied the most since 2011 as hot, dry Midwest weather threatens to erode crop yields in the U.S., the world’s biggest grower. Wheat also advanced.
Temperatures will average as much as 14 degrees Fahrenheit above normal during the next 10 days, with little rain expected in the Midwest, T-Storm Weather LLC said in a note to clients today. July and August will be the driest since 1936 in Iowa, Illinois and Indiana. Corn production will be 2.2% below the government’s forecast on Aug. 12, while the soybean harvest will be 3% less, Professional Farmers of America said Aug. 23, after a tour of crops in seven states last week.
“The weather is cooking the crop that the Pro Farmer tour already said was smaller than expected,” Mark Schultz, the chief analyst for Northstar Commodity Investment Co., said in a telephone interview from Minneapolis. “The hot, dry weather will knock down the corn and soybean crop potential daily.”
Corn futures for December delivery (CBOT:CZ13) surged 6.5% to close at $5.005 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest gain for a most-active contract since June 25, 2012. Earlier, the price touched $5.0825, the highest since July 16.
Soybean futures for delivery in November (CBOT:SX13) jumped 4.6% to $13.895 a bushel on the CBOT, the biggest advance for a most- active contract since Oct. 11, 2011. Earlier, prices rose by the 70-cent exchange limit to $13.98. Prices rose 5.5% last week, the third straight increase.
The U.S. Department of Agriculture has cut its corn-crop forecast three times in as many months, predicting production of 13.763 billion bushels. While that would be a record, it is down from 14.14 billion expected in May. On Aug. 23, Cedar Falls, Iowa-based Pro Farmer predicted the crop would be 13.46 billion.
Soybean output may fall below the government’s estimate of 3.255 billion bushels, reaching 3.158 billion, after planting delays and unusually cool, dry weather stunted growth, according to Pro Farmer, a farm adviser and newsletter producer.
“The market’s increasingly getting a bit nervous about the soybean crop,” Paul Deane, an agricultural economist at Australia & New Zealand Banking Group Ltd., said by telephone today. The forecast from Pro Farmer is “only adding to sentiment,” he said.
Rain for the Midwest will be blocked by a large ridge of high pressure over the next 10 days, increasing stress on more than half the U.S. crops, Gail Martell, the president of Martell Crop Projections in Whitefish Bay, Wisconsin, said in a report to clients today. Windy conditions will further accelerate moisture loss, reducing kernel and pod filling and lowering yield potential, Martell said.
Wheat futures for delivery in December rose 3.2% to $6.6675 a bushel in Chicago, the biggest gain since April 29.
Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.