By Rod Nickel and Sam Nelson
WINNIPEG, Manitoba/CHICAGO, July 3 (Reuters) – Relentless heat in the key U.S. corn- and soybean-growing areas of the United States drove benchmark Chicago corn to a 10-month high on Tuesday, while soybeans jumped to their strongest values since 2008, with worries building about the bottom-line impact of drought on world supply.
U.S. wheat also hit a 10-month high, tracking corn’s rally.
The U.S. Department of Agriculture (USDA) on Monday slashed its condition rating for U.S. corn to 48 percent good-to-excellent, down 8 percentage points from a week earlier. It pegged the soybean crop at 45 percent good-to-excellent,compared with 53 percent a week ago.
The long-range forecast offered some mild relief as cooler weather is expected next week in the U.S. Midwest corn- and soybean-growing region.
“There’s something for the bulls and bears today, with the crop continuing to sink with the hot, dry conditions,” said Don Roose, president and analyst at U.S. Commodities in West Des Moines, Iowa. “The bears have something with a little bit of a possible change cooler in those way distant maps.”
Chicago Board of Trade December corn gained 11-1/4 to $6.67 a bushel by 8:38 a.m. CDT (1338 GMT), after rising to $6.72 a bushel, the highest since end-August.
The most active November soybean contract rose to a contract high of $14.63 a bushel, while the spot month reached the highest price since July 2008.
Nearby July soybeans were up 13 cents to $15.45-1/4 per bushel.
The moderate temperatures forecast for next week, accompanied by some rainfall in the south, will arrive too late to save some of the already-damaged corn crop, an agricultural meteorologist said on Tuesday.
The chance for rain and cooler temperatures follows heat and dryness this week that is harming corn and soybean production prospects, said Don Keeney, meteorologist for MDA EarthSat Weather.
“The six- to 10-day is wetter for the southern Midwest and Delta, not excessively wet, on the order of 0.50 inch to one inch of rain is possible,” he said.
September wheat gained 5-1/4 cents to $7.77-3/4 a bushel. On a continuation chart, front-month wheat climbed to $7.61 per bushel, its highest since August last year.
“We are in the grip of a strong weather market and conditions in the U.S. appear to have little respite, with drought continuing across much of the Midwest and temperatures rising above 100 degrees with more regularity,” FCStone Commodity Services Europe wrote in a note.
“Yesterday’s crop ratings were more bullish than many had expected in the market,” it said.
Adding fuel to the rally, the International Grains Council on Monday cut its forecast for global wheat production in 2012/13 as the outlook for the crop in key exporter Russia deteriorated.
World wheat production was cut to 665 million tonnes from a previous forecast of 671 million and now stands well below the prior season’s 695 million.
The latest corn rating is 29 percentage points below the USDA’s initial forecast early in the crop season and the soybean rating is 11 percentage points below the USDA’s initial forecast.
Cropcast, a division of MDA EarthSat Weather, pegged the 2012 U.S. corn yield at 150.6 bushels per acre, down from its previous forecast for 153.3 bushels. It projected domestic corn production at 13.179 billion bushels, down from its prior estimate of 13.503 billion.
Cropcast forecast U.S. soybean yield at 40.0 bushels an acre, below its previous projection of 40.6 bushels, and pegged soybean production at 2.962 billion bushels, below its previous 3.014 billion bushel outlook.
Posted by Haylie Shipp