Grain prices soared again on Monday, sending soybean futures to an all-time high and corn futures to
within 2% of their record top, as an expected cooling in Midwest temperatures
failed to bring significant rains, further cutting hopes for US yields.
Chicago's best-traded December corn lot traded up the
exchange limit of $0.40 at one point, to a contract high of $7.33 a bushel.
The July contract hit $7.86 ¾ a bushel, the highest since
June 2011, when prices, on a spot contract basis, hit their record high of
$7.99 ¾ a bushel.
July soybeans actually managed to exceed their record of the 2008 rally, hitting $16.79 ½ a bushel.
The best-traded soybean lot set a contract high, of
$15.71 ¼ a bushel, while wheat - while not directly at risk from the US
heatwave, with the winter crop harvest largely finished - was pulled up to a
10-month high of $8.44 ¾ a bushel.
The rises followed a weekend in which, while banishing the Midwest
heatwave which has raised fears for huge crop losses, "oddly was not accompanied
by heavy rainfall", Gail Martell at Martell Crop Projections said.
While rainfall is expected, it is not forecast in the main
to stay south of the major Corn Belt row crop farms.
|Crop prices at close on Monday|
Chicago corn (December):$7.30 a bushel, +4.9%
Kansas wheat (September contract): $8.29 ½ a bushel, +3.1%
Chicago soybeans, (November): $15.47 ¾ a bushel, +2.8%
Paris wheat, (November): E248.75 a tonne, +2.8%
Chicago wheat, (September): $8.28 ¼ a bushel, +2.7%
London wheat, (November): £185.00 a tonne, +2.5%
Paris rapeseed, (August): E519.25 a tonne, +2.2%
"Rains in Missouri south of the I70 highway, that's not where
the production is," Jerry Gidel, feed grains analyst at Rice Dairy, said.
Weekly crop condition data later from the US Department of Agriculture
are expected to show a drop of six points, to 42%, in the proportion of the
domestic corn crop seen in "good" or "excellent" condition, the worst reading
For soybeans, the proportion rated good or excellent is seen
tumbling five points to 40%, also a 24-year low.
'Dialling in huge losses'
The weather updates sparked further falls in expectations
for US yields this year, especially the result for corn, which has been
undertaking the sensitive pollination period in far-from-ideal conditions.
"The erratic weather pattern continues to such an extent
I've seen private estimates as low as 139 bushels per acre for corn,"
GrainAnalyst.com trader Matthew Pierce said.
"There are a few in the mid-140s bushels per acre with Lanworth
in that category, with this a distinct possibility if rains do not start in the
latter half of July."
US Commodities said: "The trade is now dialling in huge
losses. A sub-40 bushels-per-acre soybean
yield is also widely discussed."
The USDA currently estimates the US corn yield at 166
bushels per acre and the soybean yield at 43.9 bushels per acre, although these
figures are up for revision on Wednesday, when it releases its next monthly keynote
Wasde crop report.
The high prices have sparked expectations of a sharp
pull-back by consumers, which would, in loosening supplies somewhat, put the
brakes on the rally.
However, ideas of this so-called demand destruction have
been limited in part by the small degree of supply coverage that major buyers
had coming into the rally - with expectations of a huge crop ahead, and official
estimates of farmgate corn prices falling to $4.20-5.00 a bushel, stemming the
incentive to buy ahead.
"End users had no
cover," Mr Gidel said.
"There was meant to be plenty of the stuff around. And
farmers had not been selling much."
Futures prices well below insurance rates gave growers
little incentive to sell ahead, rather than wait for the prospect of crop