BLBG:Soybeans Surge To Record As Midwest Drought Scorches Crop
Crop prices surged, with soybeans rising to a record, as the worst U.S. drought since 1956 scorched fields and raised chances of higher food prices.
Soybeans climbed as high as $16.445 a bushel today on the Chicago Board of Trade, surpassing the previous peak of $16.3675 on July 3, 2008. Corn rallied to the highest since 2008, trading within 1 percent of its all-time high, and wheat surged above $9 a bushel to the highest in almost four years.
The U.S. has declared almost 1,300 counties in 29 states as natural-disaster areas because of the drought. Corn and soybean fields are in the worst shape since 1988, a year when drought slashed the U.S. corn output by 31 percent, U.S. Department of Agriculture data show. The USDA cut its estimate for this year’s corn harvest by 12 percent on July 11, saying production may reach 12.97 billion bushels. The agency had projected record output of 14.79 billion bushels in June.
“There is not going to be enough supply to go around,” said Richard Feltes, the vice president of research at R.J. O’Brien & Associates in Chicago. “The U.S. drought is laying the groundwork for higher food inflation into 2013.”
Soybean futures for November delivery rose 1.3 percent to $16.405 a bushel at 3:08 a.m. on the Chicago Board of Trade. The price has jumped 36 percent this year, as U.S. harvest concerns followed a drought that slashed the past season’s crop in Brazil and Argentina.
Corn Rally
Corn rallied 1 percent to $7.9175 a bushel, after touching $7.95. The grain has surged 56 percent since mid-June. Wheat for September delivery climbed 1.4 percent to $9.16 a bushel, after rising to $9.2125, the highest since August 2008.
More than half 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.
The drought may spark a rebound in global food prices from this month through October, halting a slide that sent costs in June to the lowest in 21 months, Abdolreza Abbassian, an economist in Rome at the United Nations’ Food & Agriculture Organization, said on July 5.
“The situation has gone from tranquil a few weeks ago to relatively worrying, and now the situation is getting to be pretty critical,” Abbassian said. “Obviously it’s not going to be a relaxing summer.”
To contact the reporters on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net; Whitney McFerron in London at wmcferron1@bloomberg.net
To contact the editors responsible for this story: Steve Stroth at sstroth@bloomberg.net; Claudia Carpenter at ccarpenter2@bloomberg.net
