Forexpros – U.S. grain futures were higher during European morning hours on Tuesday, rebounding from losses in the previous session as market players continued to focus on dismal crop conditions in the U.S. Midwest and Great Plains-region.
Grain futures were also boosted by forecasts calling for dry weather in key grain-growing areas in the U.S.
Escalating concerns over scorching heat and dry weather conditions in the U.S. Midwest and Great Plains-region have been fuelling a furious rally in grain prices since mid-June.
Corn prices have surged nearly 55% during the period, wheat futures soared approximately 41%, while soy prices added 23%.
However, investors cashed out of the market Monday amid concerns high prices may be hurting global demand for U.S. grains.
Updated weather models Tuesday predicated less rain than normal will probably fall from Montana to western New York, including the Midwest, from August 18 to 22.
On the Chicago Mercantile Exchange, corn futures for September delivery traded at USD7.8950 a bushel, gaining 0.8%. Earlier in the day, prices rose by as much as 0.85% to trade at a session high of USD7.9012 a bushel.
Front-month prices touched an all-time high of USD8.4238 a bushel on August 9.
The USDA’s weekly crop progress report showed that 23% of the U.S. corn crop was rated in ‘good’ to excellent’ condition as of August 12, unchanged from the previous week and below the 60% recorded in the same week a year earlier.
The share of the U.S. corn crop that was rated ‘poor’ to ‘very poor’ increased to 51% from 50% a week earlier.
The report showed that 16% of the crop in Iowa was rated ‘good’ to ‘excellent’, while only 5% of the crop was rated ‘good’ to ‘excellent’ in Illinois.
Iowa and Illinois are the two largest corn growing states in the U.S., accounting for nearly 29% of U.S. supplies.
The U.S. produced 38% of the world’s corn last year, making it the both world’s largest corn producing nation and the largest exporter of the grain.
Elsewhere, soybeans futures for September delivery traded at USD16.3188 a bushel, adding 0.55%. Prices rose by as much as 0.75% earlier to trade at a daily high of USD16.3225 a bushel.
Front-month prices rallied to a two-week high of USD16.9887 a bushel on August 9.
The USDA said 30% of the soybean crop was rated ‘good’ to ‘excellent’ last week, up a modest 1% from the previous week.
Despite the improvement, U.S. soy crop conditions remain at the lowest levels since 1988 for this time of year.
Soy futures have gained sharply in recent weeks, as the same hot, dry weather that boosted corn was seen benefitting soy futures as well. Soybeans are grown in many of the same regions across the U.S. as corn.
The USDA slashed its average soybean-yield estimate to 36.1 bushels per acre last week, the lowest average yield since 2003.
Global soybean supplies are already on the decline, as severe drought conditions earlier in the year in major South American growers Brazil and Argentina damaged crops in the region.
Meanwhile, wheat for September delivery traded at USD8.6100 a bushel, advancing 0.5%. The September contract rose by as much as 0.75% earlier to hit a session high of USD8.6363.
The USDA said the spring-wheat crop was 61% ‘good’ to ‘excellent’, down from 63% the previous week.
Wheat futures have been under heavy selling pressure, losing nearly 6% in the two sessions leading up to Tuesday after the USDA raised its average wheat-yield estimate to a record 48 bushels per acre last week.
A smaller-than-expected decline in wheat production from the Black Sea-region has also been weighing.
USDA cut wheat production in the former Soviet Union states by 5.6 million tonnes to 82.96 million, and dropped Russian output by 6 million tonnes to 43 million.
Corn is the biggest U.S. crop, valued at USD66.7 billion in 2010, followed by soybeans at USD38.9 billion, government figures show. Wheat was fourth at USD13 billion, behind hay.
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