BLBG:Corn Resumes Rally As Worst U.S. Drought In Decades Cuts Yields
Corn resumed a rally as the worst drought in decades wilted crops in the U.S., the biggest grower and exporter, boosting concern that global supply will decline.
Corn for December delivery rose as much as 0.7 percent to $7.765 a bushel on the Chicago Board of Trade, erasing a 1 percent loss. The contract traded at $7.75 at 11:43 a.m. in Singapore. The price reached $7.89 yesterday, the highest level for a most-active contract since June 9, 2011, and near the 2008 record of $7.9925, before ending 0.2 percent lower.
The December contract may rally to $8.25 to $8.50 as U.S. output slumps to 11.8 billion bushels (299.7 million metric tons), according to Dan Cekander, director of grain research at broker Newedge USA LLC. That’s 29.75 million tons less than the latest prediction from the U.S. Department of Agriculture, and would be the smallest crop since 2006-2007.
“Crop concerns in the U.S. continue to provide a solid floor,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, wrote in a note. “The trade is now asking at what price will grain demand be sufficiently rationed.”
U.S. corn yields may drop to 134.9 bushels an acre, Cekander said in an interview yesterday. That compares with 146 bushels forecast by the USDA on July 11, and a forecast yesterday of 138 bushels from AccuWeather.com.
About 55 percent of the contiguous U.S. states were in moderate-to-extreme drought at the end of June, the highest percentage since December 1956, according to the National Climatic Data Center. Crop ratings for U.S. corn and soybeans are the worst for this time of year since a drought in 1988.
Soybeans for November delivery gained as much as 0.6 percent to $15.9975 a bushel, and traded at $15.935. The price rose to $16.07 yesterday, the most expensive since July 2008.
September-delivery wheat fell as much as 1.1 percent to $8.755 a bushel before trading at $8.82. Futures reached $8.985 yesterday, the highest level for a most-active contract since Feb. 15, 2011.
To contact the reporters on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net; Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
