GRAINS-Corn extends gains on supply woes, wheat near 17-mth top

Thu Jul 12, 2012 11:47pm EDT

* U.S. corn up for 2nd day, adds 45 pct in 4 weeks
    * Market expects more damage as drought continues
    * Soybeans, wheat rise as buyers resume purchases

 (Adds details, quotes)
    By Naveen Thukral
    SINGAPORE, July 13 (Reuters) - Chicago corn rose for a
second straight day on Friday, extending its drought-driven
rally over four weeks to 45 percent, with little relief expected
for the crop which has been hit by the worst drought in the U.S.
grain belt in 25 years.
    Soybeans firmed on concerns over global supplies as the U.S.
drought curbs yields, while wheat was little changed, trading
near Thursday's 17-month top.
    "A correction in prices after the release of USDA data has
given opportunity for traders to buy back into the market," said
Serene Lim, a commodities analyst at Standard Chartered Bank in
Singapore. "We are going to see more heat and dryness in the
Midwest which may severely impact soybeans as well."
    The new-crop December corn has gained 6 percent this week,
taking gains since mid-June to 45 percent, while front-month
wheat had added 5 percent, up 36 percent in four weeks. November
soybeans have risen almost 2 percent, up 17 percent in four
weeks.
    On Friday, Chicago Board of Trade new-crop December corn
 rose 0.5 percent to $7.36 a bushel by 0258 GMT, building
on a 4 percent jump in prices on Thursday.
    The front-month soy contract rose 0.3 percent to
$16.30 a bushel after climbing to a record top of $16.79-1/2 a
bushel on Monday. September wheat was up 0.5 percent
at$8.50-3/4 a bushel.
    On a continuation chart, wheat hovered near Thursday's
high of $8.42, its strongest since February last year.
    Buyers have resumed purchases after prices dipped following
the U.S. Department of Agriculture report on Wednesday.
    Grain millers in South Korea, Japan, Taiwan and Iraq are
back in the market, seeking wheat, soybeans and corn supplies.
 
    Grain prices are, however, expected to remain supported amid
weather worries. Little relief was expected from the severe
dryness, with only minor volumes of rain expected in some areas
of the Midwest over the next week to 10 days, agricultural
meteorologists said.
    Rainfall amounts from 0.30 to 0.80 inch were expected in the
southeastern Midwest and in the Dakotas, but virtually no rain
is likely elsewhere. 
    The worst drought in the Midwest since 1988 has done
considerable damage to this year's corn crop. The USDA slashed
its corn yield estimate for the world's top grower and exporter
by an unprecedented 20 bushels, to 146 bushels per acre.
    Half of the U.S. corn crop began pollinating in late June
under triple-digit temperatures and severe rain deficits,
conditions which damaged yield potential beyond repair.
    Drought conditions in the Midwest worsened over the past
week. A weekly U.S. drought monitor showed about a third of the
nine-state region in severe to exceptional drought in the week
ended July 10, up from about a quarter of the region a week ago.
 
    Investment bank Goldman Sachs on Thursday raised its price
forecasts for wheat, corn and soybeans due to the worsening
drought and cut its corn yield forecast for the second time in
less than two weeks. 
    Barclays also raised its price forecasts for the three crops
due to the drought, the bank said in a note. 
    Strong export sales added support in both markets as USDA 
data showed corn sales last week hitting a two-month high. Top
importers Japan and Mexico made their largest purchases since
April despite rising prices.
    Commodity funds bought an estimated net 20,000 Chicago Board
of Trade corn futures contracts on Thursday, trade sources said.
They bought 4,000 soybean contracts and 4,000 wheat contracts. 
 

  Prices at  0258 GMT
  Contract        Last    Change  Pct chg  Two-day chg MA 30   RSI 
  CBOT wheat     850.75     4.00  +0.47%    +2.97%     729.44   76
  CBOT corn      736.00     3.75  +0.51%    +4.55%     624.73   76
  CBOT soy      1532.50     3.50  +0.23%    +0.66%    1425.34   72
  CBOT rice      $15.01    $0.01  +0.10%    -0.66%     $14.71   52
  WTI crude      $85.81   -$0.27  -0.31%    +0.00%     $83.37   57
  Currencies                                                
  Euro/dlr       $1.220  -$0.012  -0.97%    -0.54%
  USD/AUD         1.015   -0.006  -0.60%    -0.42%
  Most active contracts
  Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight
  RSI 14, exponential
 

 (Editing by Himani Sarkar)
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