Soybeans rallied nearly three per cent Tuesday to hit another peak, while corn rose nearly two per cent on evidence of decimated crops amid the worst drought in half a century and a need to temper demand through even higher prices.
Corn and soybean futures at the Chicago Board of Trade (CBOT) resumed their climb after a setback last week, making a push to retest record highs as money managers bet that end-users would scramble for the dwindling supplies.
Chicago wheat rose more than two per cent in tandem with corn and soybeans and on a sharp drop in the dollar on growing expectations that European officials will put together a plan to tackle the region’s debt and economic crisis.
"The dollar is part of the trading equation today," said futures specialist Sterling Smith of Citigroup in Chicago.
Mark Kinoff, president of Ceres Hedge in Chicago, said investors holding short positions in the market were being flushed out by bullish investors.
"The guys who are long this market are the fund managers, while end-users are not well covered," Kinoff said.
The Pro Farmer tour, an eclectic mix of crop forecasters, grains analysts, farmers and journalists, kicked off on Monday and early findings confirmed trade expectations that the crops will be smaller than currently forecast by the government.
But on Tuesday, the tour found slightly better-than-expected corn yield counts in central and north-central Indiana and in south and eastern Nebraska, contrasting with poor yields in Ohio and South Dakota on Monday.
In Nebraska, where fields are extensively irrigated, scouts pegged the corn yield at 178.8 bushels per acre after inspecting eight fields, up from last year’s 153.7 bushels.
Soybean pods averaged 869.6 per three-foot square, below the 1,286.5 of last year.
"It feels good to be in some good corn," Pro Farmer editor Chip Flory said on the Nebraska leg of the tour.
Corn yields after the first four tour stops on one Indiana route across Huntington, Wabash and Whitley counties were estimated at 137.07 bushels per acre, above the 134.02 bushels a year ago. The soybean pod count was 1,628.48, better than last year’s 1,140.30.
The tour will announce its national yield and production estimates on Friday.
At the cusp
CBOT new-crop November soybeans rose 2.9 per cent to end at $17.32-1/2 a bushel, having hit a new contract high of $17.34 (all figures US$).
December corn rose 1.8 per cent to end at $8.38-3/4 a bushel, the highest since Aug. 10. The contract was at the cusp of being technically overbought based on the Relative Strength Index, which stood at 69.4, just short of the start of overbought territory at 70.
December wheat rose two per cent to end at $9.22 per bushel.
The corn yield in Ohio was projected at the lowest level in 10 years after severe drought and hot temperatures sapped the crop during its most vulnerable period of pollination, scouts on the tour found.
The yield in the No. 8 corn-growing U.S. state was estimated at 110.5 bushels per acre, sharply below the U.S. Department of Agriculture’s estimate earlier this month of 126.0 and the three-year tour average of 160.5.
In South Dakota, scouts came across field after field where corn had been harvested for silage to feed on-farm cattle — which means less corn being harvested for grain.
The U.S. corn harvest got off to its earliest start ever last week as early planting last spring and a hot summer accelerated crop development, USDA said in a report.
Four per cent of the crop was harvested as of Sunday, according to the weekly crop progress report released after the market closed on Monday.
In Europe, milling wheat futures were also higher with front-month November rising 1.8 per cent to end at 267.75 euros a tonne, its highest level since Aug. 10.
— K.T. Arasu writes for Reuters from Chicago.