CHICAGO: US corn futures jumped to a seven-week peak on Friday, ending a volatile year with the third straight annual gain, as concerns mounted about hot, dry weather hurting output in Argentina, the No. 2 exporter of the grain.
Corn finished up 2.8 percent on the year after reaching a record high in June on tight supplies. Wheat fell 18.1 percent on the year, while soybeans lost 14 percent.
The market remained worried about corn supplies as persistent dryness and rising temperatures in Argentina threaten the next harvest. That could shift demand to the United States, the world's leading corn exporter.
"The most concern is on corn," said Karl Setzer, analyst for MaxYield Cooperative.
Corn for March delivery settled up 8-1/2 cents, or 1.3 percent, at $6.46 1/2 per bushel at the Chicago Board of Trade. Soybean and wheat futures also were stronger.
Driving prices higher were forecasts for conditions to stay dry and turn hotter during the next 10 days. Temperatures will rise above 90 degrees Fahrenheit next week, with some areas likely reaching 100 degrees, said John Dee, president of Global Weather Monitoring.
Traders are focusing on Argentina's corn crop as it is approaching its key development period of pollination.
"Hot and dry, that kind of says it all," Dee said.
The United States does not have a lot of extra corn on hand if Argentine farmers suffer significant crop losses. US supplies as of Aug. 31 are projected to be at their lowest level since the mid 1990s, according to the US Department of Agriculture.
Supplies have been drained by strong demand, particularly from the ethanol sector. Steady buying by end users and concerns about damaging heat in the United States helped drive corn prices to their record high near $8 a bushel this summer.
Grain and soybean prices began tumbling in the latter half of the year on easing demand, the realization of a satisfactory corn crop and concerns about a global economic slowdown.
Data issued by the USDA on Friday showed demand for corn was weak last week. Corn export sales hit a six-week low of 345,200 tonnes for the week ended Dec. 22.
"Obviously we're not trading demand," said John Kleist, analyst for ebottrading.com.
Traders were keeping a close eye on weather forecasts ahead of the holiday weekend and buying back previously sold positions in the markets, Kleist said. The CBOT will be closed on Monday due to the start of the new year.
Soybeans for January delivery jumped 11 cents, or 0.9 percent, to $11.98-1/2 a bushel on Friday. Wheat for March delivery climbed 7 1/2 cents, or 1.2 percent, to $6.52-3/4 per bushel.
Soybeans posted their first annual decline in three years, while wheat posted its third loss over the last four years.
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