Corn hits new contract high on yield woes

CHICAGO: US corn rose to a new contract high on Wednesday as crop scouts on a tour continued to find poor yield potential in the Midwest grain belt.

Soybean and wheat futures also turned up after seesaw trade with gains slowed by nervous profit-taking following three days of gains that boosted wheat to two-month highs.

"The crop tour is reporting low yields. I don't think that is anything new, but it is another reminder of production losses so the tour reports are bullish," said Don Roose, president and analyst for US Commodities, Des Moines, Iowa.

Participants in the annual Pro Farmer tour of Midwest crops this week said corn yield prospects in Indiana were far below average and Nebraska's yield potential was 3 percent below last year.

The crop scouts will update tour results on Wednesday and report on the potential of top corn and soy states Illinois and Iowa on Thursday. Pro Farmer will issue its forecast for US corn production on Friday, following this week's tour.

On Tuesday, weather forecaster Commodity Weather Group pegged this year's corn crop at 12.485 billion bushels, below its previous outlook for 12.621 billion and below the US government's current outlook for 12.914 billion.

At 10:05 a.m. CDT (1505 GMT), CBOT new-crop December corn was up 4-1/2 cents at $7.48-3/4 per bushel, new-crop November soy was up 3-1/4 at $14.00-1/2 and September wheat was up 4-1/4 at $7.61-1/2.

The new contract high for December corn of $7.48 was up from the previous high of $7.44 set on Tuesday.

Choppy dealings were noted as traders said there was some reluctance to hold a large position in the market ahead of an upcoming Federal Reserve meeting. Fed Chairman Ben Bernanke on Friday will speak at a central bank conference that begins on Thursday in Jackson Hole, Wyoming.

Investors are cautious over US Treasury holdings ahead of a speech on Friday by Federal Reserve Chairman Ben Bernanke which some hope could signal fresh monetary stimulus, a survey released on Tuesday showed.

Gains in wheat were trimmed as top quality spring wheat traded on the Minneapolis Grain Exchange posted losses which were tied to a larger-than-expected forecast of Canadian output.

"The Stats Canada number was bigger than expected," Roose said.

Statistics Canada said on Wednesday that Canadian farmers expect a larger wheat harvest in 2011 at 24.08 million tonnes, up 3.9 percent from last year's 23.167 million. On average, analysts' forecasts were lower at 23.5 million tonnes.

Copyright Reuters, 2011