Corn, soy extend rally after USDA acreage surprise

PARIS/SINGAPORE: Chicago corn rose more than 3% on Thursday and soybeans also rallied as lower-than-expected US acreage estimates a day earlier fuelled supply concerns as some crops faced hot, dry weather.

Wheat edged higher as the rally in corn and soybeans offset a higher than anticipated US area projection and supply pressure from the start of winter wheat harvesting.

On Wednesday, corn futures climbed by their daily exchange-imposed limit after the US Department of Agriculture (USDA) pegged plantings of the crop at 92.692 million acres, below an average trade expectation of 93.787 million.

The agency said soybean plantings totalled 87.555 million acres, compared to analysts' average estimate of 88.955 million.

"The planting report raises supply concerns on longer term," said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.

"But the main focus now is still weather as the corn crop could swing 20-40 million tonnes on that alone."

After rain this month eased worries about crop stress in part of the US Midwest, forecasts for hot weather and limited rain in early July have underscored risks for northern and western growing belts.

The most-active corn contract on the Chicago Board of Trade (CBOT) was up 3.3% to $6.07-3/4 a bushel at 1213 GMT.

CBOT November soybeans were up 1.7% to $14.22-1/4 a bushel.

"The USDA has managed to surprise the market once again," Commerzbank said of the corn and soybean area figures.

"Furthermore, the inventory data (...) paint an even tighter picture than had already been anticipated."

In its quarterly stocks report, also released on Wednesday, the USDA said domestic corn and soybean stocks on June 1 were at their lowest in years and slightly below average trade expectations.

CBOT September wheat was up 1.3% at $6.88 a bushel.