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Markets

Corn, wheat, soybeans rally on weather concerns

  • Forecast dryness supports prices after long weekend.
  • Chinese demand, crude oil rally support grains.
  • Soybeans also rally.
01 Jun 2021

PARIS/SINGAPORE: Chicago corn and wheat futures climbed sharply on Tuesday as adverse crop weather in parts of North America put attention back on supply risks.

Soybeans also rose, with a rally in crude oil also bolstering crop markets by raising the prospect of rising demand for biofuel.

Persisting dryness in northern US and Canadian crop belts could be accentuated by hot weather forecast later this week, threatening to stress much of the spring wheat crop and some corn and soybean crops.

"There is dry weather in the United States and Canada," said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.

"There are doubts around wheat crop in Canada and US corn yields."

The Commodity Weather Group (CWG) said in a daily note that over one-third of US spring wheat could see stress rebuild in the next two weeks, with around 15% of corn and soybeans seen at risk from dryness.

Frosts over the weekend in the northern US also put the focus on weather risks, although CWG said freeze damage would be very limited.

The most-active corn contract on the Chicago Board Of Trade (CBOT) was up 2.7% at $6.74-3/4 a bushel, as of 1243 GMT, while new-crop December futures jumped around 4.5%.

CBOT wheat rose 3.2% to $6.84-1/2 a bushel while soybeans advanced 1.6% at $15.54-1/2 a bushel.

Chicago futures were resuming trading on Tuesday after a three-day holiday weekend in the United States. Prices had ended lower on Friday.

The corn market has also been underpinned by Chinese demand.

The US Department of Agriculture last week confirmed more than 5.6 million tonnes in new-crop corn sales to China, while not showing large-scale cancellations.