(July 7): Soybean and corn futures jumped on Monday as traders turned their attention to weather concerns looming over global crops.
The most-active soybean and corn contracts gained more than 3%, both hitting their highest price in weeks. Wheat and soybean byproducts, such as soymeal and soyoil, also climbed.
“Heat and less rain in the US forecast, and heat and less rain in the European forecast is supporting grains this morning,” Total Farm Marketing analyst Naomi Blohm said in a note.
The rallies pushed both corn and soybean futures above their 100-day moving averages, a closely watched technical level that signals improving buying momentum.
“The overnight breakout is a strong technical indication, but prices will be volatile, hinging on every forecast update,” the Hightower Report said in a note about soy products. On corn, Hightower said, “there is little else that matters early this week except for weather and that will be the dominant focus into Friday’s USDA supply and demand report for July.”
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Traders’ concerns about weather follows a scorching heat dome that hit much of the US over the weekend.
While temperatures have broadly dropped since then, high heat is still present in many parts of the country’s east, according to the latest weather forecasts from the National Weather Service. The hot weather comes at a crucial time for corn, which is now entering its pollination stage and vulnerable to heat damage that can result in lower yields.
“July weather is now firmly in the driver’s seat,” Dave Whitcomb, founder of Peak Trading Research, said in an email. “This is a window of the year when traders are nervous about corn’s pollination window and upcoming soybean production weather.”
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Heat waves may also have damaged almost a third of French corn, according to preliminary government estimates released last week.
Meanwhile, a new cold front is soon expected to bring rains to second-largest exporter Brazil, with showers likely reaching key grain producing regions in the midwest and northeast of the country by next Sunday and Monday, Rural Clima meteorologist Marco Antonio dos Santos said. Rain is unusual this time of year, he said, and could be harmful to the ongoing corn harvest if strong winds cause stalks bend or break, a condition known as lodging.
“Right now, the corn is dry, and any strong wind could cause it to lodge,” Santos said, and “that is creating a certain level of concern.”
The market is also watching for further details on US-China trade, after the Chinese government said last week the two countries have agreed in principle to include agricultural products in a reciprocal tariff reduction framework. Soybean crushers in the Asian nation usually start booking substantial volumes of new crop supplies from American farmers in August.
Prices:
- Corn rose 3.5% to US$4.5675 a bushel at 10.25am in Chicago
- Soybeans were up 3.9% to US$11.93 a bushel
- Wheat rose 1.9% to US$6.11 a bushel
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