Forexpros – U.S. grain futures rallied during European morning hours on Tuesday, with corn and soy prices marching higher amid ongoing concerns over dismal crop conditions in the U.S. Midwest and Great Plains-region.
Meanwhile, wheat prices were higher for the fifth consecutive day as worries over a disruption to supplies from Russia boosted the grain.
On the Chicago Mercantile Exchange, corn futures for September delivery traded at USD8.2000 a bushel, adding 0.6%. The September contract rose by as much as 0.65% earlier to trade at a session high of USD8.2050.
Front-month prices touched an all-time high of USD8.4238 a bushel on August 10.
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 19, unchanged from the previous week and below the 57% recorded in the same week a year earlier.
The share of the U.S. corn crop that was rated ‘poor’ to ‘very poor’ held steady at 51%.
The report showed that 15% of the crop in Iowa was rated ‘good’ to ‘excellent’, down 1% from a week earlier, 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 USD17.2500 a bushel, jumping 1.25%.
The front-month contract rose by as much as 1.4% earlier to trade at a daily high of USD17.2662 a bushel, the strongest level since July 23. Soy prices rallied to a record high of USD17.7762 a bushel on July 20.
The USDA said 31% 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.
Expectations of increased demand for U.S. soy from top consumer China further boosted sentiment on the oilseed. Last week, the USDA confirmed a sale of 706,100 tonnes of U.S. soybeans to China, the largest purchase since June.
Total U.S. soy exports last week totaled 1.02 million tonnes last week, the highest amount in six weeks.
Meanwhile, wheat for September delivery traded at USD8.8538 a bushel, gaining 0.65%. The September contract rose by as much as 0.8% earlier to hit a session high of USD8.8650.
Front-month prices have rallied nearly 6% in the four sessions leading up to Tuesday, boosted by concerns over tightening supplies from Russia.
Influential Russian industry group SovEcon said last week that Russia’s exportable grain surplus of 10 million to 11 million tonnes could run out by November if the country retains a high pace of exports.
According to the firm, Russian wheat stocks totaled 10.61 million tonnes as of August 1, down 30% from a year earlier and the lowest since 2003.
The news fuelled fears over the implementation of export limits on Russian grain shipments in the near-term.
Russia is a major wheat exporter and competes with the U.S. for business on the global market. Fears over a disruption to supplies from the country could boost demand for U.S. supplies, which is the world’s third largest wheat producer and biggest exporter.
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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