Corn reaches 5-year high on crop uncertainty, firm cash; soy also firm

CHICAGO: US corn futures climbed to their highest in five years on Friday as forecasts for more showers in the eastern Midwest next week clouded the outlook for late plantings and production prospects, analysts said.

Soybeans also advanced on the US weather worries while Chicago Board of Trade wheat futures were choppy, setting back after multi-month highs.

At the CBOT as of 12:39 p.m. CDT (1739 GMT), July corn was up 8-1/4 cents at $4.50-1/4 per bushel after reaching $4.57-1/4, a contract high and the highest for a most-active contract since June 2014.

CBOT July soybeans were up 5 cents at $8.93 a bushel and July soft red winter wheat was down 1/4 cent at $5.35-1/4, retreating after touching $5.44, its highest since Dec. 19.

Corn set the tone, with the nearby July contract gaining sharply against back months on spreads, reflecting firm cash markets.

Until recently, big corn surpluses from a series of bumper US harvests had traders selling nearby contracts and buying back months.

That trend has reversed, however, as unprecedented planting delays in the Corn Belt raised questions about the potential size of the 2019 crop.

End-users of corn, such as producers of livestock feed and ethanol, have been bidding up for old-crop supplies in the cash market this week, especially in the eastern Midwest, where farmers have been hit hard by unrelenting spring rains.

That demand has sent the nearby CBOT July contract surging against back months as traders unwind short July/long September futures.

"These eastern Corn Belt end-users, they are deathly afraid that they are not going to have any corn to draw on. That's why the spread has just exploded," said Tom Fritz, a partner at EFG Group in Chicago.

CBOT soybeans rose on outlooks for rain over the next 15 days, with the heaviest precipitation expected in Missouri, Illinois, Indiana and Ohio.

"The persistent wet weather in these areas will severely limit remaining soybean planting and increase the potential for significant declines in soybean acreage, in addition to the large declines in corn acreage that are now unavoidable," space technology company Maxar said in a daily weather note.

CBOT wheat futures turned lower on profit-taking after the July contract reached a six-month high.

But K.C. July hard red winter wheat was firm, supported by expectations of a pick-up in the amount of wheat fed to cattle as a cost-effective alternative to corn. Front-month CBOT corn on Friday was trading at a discount of only about 23 cents a bushel to front-month K.C. wheat , the narrowest spread in three years.

"Every feedlot I have is looking at feeding wheat now," said Dan Basse, president of AgResource Co in Chicago. "At these kinds of spreads, people are really going to jump on feeding wheat."