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GRAINS-US new-crop corn, soy hit contract highs on weather woes
July 16, 2012 / 4:23 AM / 5 years ago

GRAINS-US new-crop corn, soy hit contract highs on weather woes

* Corn jumps 4 pct; soy, wheat gain around 2.5 pct
    * Forecasts of more stressful U.S. weather this week
    * China's Dalian soy, corn rally, tracks U.S. markets
    * Coming Up: USDA's weekly crop progress report

 (Adds details, quotes)
    By Naveen Thukral
    SINGAPORE, July 16 (Reuters) - Chicago new-crop corn jumped
4 percent on Monday, while soybeans gained about 2.5 percent
with both markets climbing to contract highs on forecasts of
more stressful hot weather in the U.S. grain belt this week.
    Wheat also gained 2.5 percent, tracking corn prices and
building on a weather-driven rally in the U.S. markets which has
lifted corn 46 percent and wheat 35 percent in the past four
weeks.
    "Strong gains reflect the ongoing supply issues in the U.S.
as forecasts of high temperatures over the week will lead to
further deterioration in corn and soybeans yield potential,"
said Luke Mathews, a commodities strategist at the Commonwealth
Bank of Australia.
    "Even though there are some forecasts of light rains, there
is consensus out there that the rain will hardly be enough to
offset the drought."
    Chicago Board of Trade new-crop December corn rose as
much as 4 percent to a contract high of $7.70 a bushel.
    Actively traded November soybeans gained as much as
2.4 percent to $15.90-1/4 a bushel, a contract high, while
September wheat added 2.5 percent to $8.68-3/4 a bushel.
    China's Dalian soybeans and corn futures jumped, mirroring
gains in U.S. markets, as the world's biggest soybean importer
and a key corn buyer takes a hit from rally in grain and oilseed
prices.
    Actively traded Dalian soybean futures were up 3.3
percent by 0402 GMT and corn gained 2.3 percent.
    "China's demand for soybeans remains robust as the livestock
breeding sector has entered peak consumption period, which will
draw down the stocks at ports during August to October period,"
said Xia Tian, an analyst with Yong'an Futures, referring to the
winter months and holiday period when meat consumption rises.
    Last week, China's soybean stocks at ports fell for a second
straight week to about 6.6 million tonnes from 6.7 million
tonnes previous week.
    
    SHRINKING CROPS
    In the United States, a lack of meaningful rain in areas
hardest hit by the worst drought in nearly 25 years is shrinking
crops in the world's top corn and soybean exporter.
    On Friday, forecasters said there was little relief in sight
this week, with temperatures set to return to the high 90s to
100 degrees Fahrenheit in the western Corn Belt, and rise to the
upper 90s F in the central-eastern Midwest.
    Drought stress has already dragged corn and soy crop
condition ratings to the lowest point for this time of year
since 1988, and traders are expecting further downgrades in the
U.S. Department of Agriculture's weekly report on Monday.
    The corn and soybeans crop were rated at a 25-year low, with
just 40 percent in good-to-excellent conditions as of July 8.
    After getting off to a record planting pace amid one of the
mildest winters in decades, the corn crop ran into trouble when
the weather turned dry and temperatures hit triple-digits.
    Commodity funds were net buyers of an estimated 12,000 corn
contracts on the day, along with a net 5,000 soybean contracts,
trade sources said. 
    Large speculators raised their bullish bet on corn to a
three-month high as investors jumped on a rally fueled by
drought in key growing areas of the Midwest, regulatory data
released on Friday showed.
    The Commodity Futures Trading Commission's weekly
commitments of traders report also showed that noncommercial
traders, a category that includes hedge funds, trimmed their net
long stake in soybeans as some speculators placed bets that the
market had peaked.
    The Midwest drought has done considerable damage to this
year's corn crop. The USDA last week slashed its corn yield
estimate for the world's top grower and exporter by an
unprecedented 20 bushels, to 146 bushels per acre.
    
  Prices at  0403 GMT
  Contract        Last    Change  Pct chg  Two-day chg MA 30   RSI 
  CBOT wheat     867.75    20.00  +2.36%    +2.36%     744.15   83
  CBOT corn      769.25    29.00  +3.92%    +3.92%     636.90   73
  CBOT soy      1587.75    35.25  +2.27%    +2.27%    1438.42   70
  CBOT rice      $15.36    $0.08  +0.49%    +2.43%     $14.75   69
  WTI crude      $86.87   -$0.23  -0.26%    +0.92%     $83.54   60
  Currencies                                                
  Euro/dlr       $1.224  -$0.002  -0.17%    -0.09%
  USD/AUD         1.022   -0.003  -0.25%    -0.02%
  Most active contracts
  Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight
  RSI 14, exponential
 
 (Additional reporting by Lincoln Feast in SYDNEY and Niu
Shuping in BEIJING; Editing by Himani Sarkar)

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