US corn and soyabean futures rallied on Friday, with corn gaining 3 percent for its biggest daily rise in three weeks, as buyers remained concerned that hot and dry conditions will reduce crop yields in the Midwest and further diminish domestic stocks.
"I think the supplies are still going down faster than the demand in the market's eyes as long as the weather stays dry and hot," said Mike Zuzolo, president of Global Commodity Analytics and Consulting. "The maps still look pretty dry for the next 10 days."
Wheat futures also rose, rebounding from their sharpest decline in more than two months as investors evened positions ahead of a long weekend. Short-covering provided support too for corn, soyabeans and wheat. For the week, corn prices dropped 0.2 percent, breaking a string of four straight increases. Wheat also snapped a four-week winning streak, dropping 4.7 percent during the last five trading days.
Soyabean prices rose 1.6 percent for the week, the market's fourth straight week of gains. CBOT December corn settled up 21-1/2 cents at $7.60 a bushel. The front-month contract gained 3 percent, its biggest daily rally since rising 3.6 percent on August 11.
CBOT November soyabeans finished up 11-1/4 cents at $14.45-3/4 a bushel and CBOT December soft red winter wheat rose 14-1/2 cents to $7.75-1/2. "You are getting a rally back because fundamentally I did not see any reason for yesterday to be anything more than a correction," said Jon Marcus, president of Lakefront Futures and Options. "I would not want to be short these markets right here."
Strength in corn added support to wheat prices. The gains came despite bearish outside markets such as a firm dollar and falling crude oil prices. On Thursday, US corn and wheat posted their biggest drops in two months of nearly 4 percent as traders locked in profits from strong monthly gains. The market will be closed on Monday to mark US Labour Day.
Estimates of the US corn crop have fallen as temperatures heated up this weak. Market sources said prices had been buoyed by talk of crop forecaster Lanworth issuing a new forecast for average US corn yields of 143 bushels per acre. Lanworth, a unit of Thomson Reuters, declined to comment. "There are all sorts of stories out there about reduction in yield," said Dan Kuechenmeister, manager of the commodities department at RBC Dain Rauscher. "It is continued concerns about tight supplies. There is certainly the possibility for more bullish news if we reduce crop size more."
Commodity brokerage firm INTL FCStone estimated this year's US corn yield at 146.3 bushels per acre (bpa), down 4.5 percent from its previous estimate of 153.2. It put the corn harvest at 12.350 billion bushels, down 5 percent from its August 2 forecast of 13.002 billion. It also lowered its US soyabean production estimate by 3.6 percent to 3.030 billion bushels from its previous forecast of 3.145 billion.
"If what they have is true, we are looking at a corn carryout that is unsustainable," said Paul Haugens, vice president for Newedge USA. Hot weather in the US Midwest late this week likely added further stress to the filling corn crop and late pod-setting soyabeans, an agricultural meteorologist said on Friday. The hot weather is expected to continue on Friday, followed by a rapid cool-down and only minor amounts of rainfall are expected, said John Dee, meteorologist for Global Weather Monitoring.
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