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Corn rallies

07/22/2011 @ 9:43am

CHICAGO, Illinois (Agriculture.com)--With uncertainty surrounding yield loss from extreme heat and surging demand, the CME Group corn market surged higher Friday. 

Though weather outlooks show easing crop stress from scorching temperatures, the market remains concerned about damage done to the U.S. corn crop, one analyst says.

The Dec. corn futures settled 12 1/2 cents higher at $6.85 1/2. The Nov. soybean contract settled 1/4 of a cent higher at $13.88 1/4. The Sep. wheat futures finished 15 cents higher at $6.92 1/4. The Dec. soybean meal futures contract closed $0.40 per short ton higher at $369.30 and Aug. soyoil futures settled $0.10 higher at $57.48.

In the outside markets, the NYMEX crude oil is $0.62 per barrel higher, the dollar is higher and the Dow Jones Industrials are down 53 points.

Tim Hannagan, PFGBest.com senior grain analyst, says a favorable weather outlook for the end of this month and the start to August would normally be viewed as negative for futures pricing, but not so. 

"About 10% of the southern Delta corn and beans remain stressed and half the Midwest dry during key yield development time for corn and beans," Hannagan says. The crop condition ratings are highest in the western Corn Belt and lowest in the eastern Corn Belt and southern Delta."

For Monday's USDA Crop Conditions Report, the trade expects ratings to drop between 3%-4%.

"So, the WCB doesn't need the rain amount like the other areas. If weekend rains are bigger than estimates, we could open lower Sunday night and Monday but be a buyer on any break to start the week, as traders will want to buy long ahead of Monday's 3 PM central time crop condition report," he says.

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