CHICAGO, Illinois (Agriculture.com)--As they traded all session, the CME Group grain markets settled sharply higher Friday.
The Dec corn futures settled 17 1/4 cents higher at $5.13 1/4. The Nov. soybean contract settled 32 3/4 cents higher at $10.69. The Dec. wheat futures closed 20 cents higher at $7.39 1 /4. The Dec. soyoil futures settled 55 points higher at $42.30. The Dec. soymeal futures ended $12.25 higher at $308.50 per short ton.
In the outside markets, the NYMEX crude oil is $0.80 per barrel lower, the dollar is higher, and the Dow Jones Industrials are up 25 points.
Matt Pierce, a CME Group floor trader and analyst for Pitguru.com, says weather in China was the catalyst for sharply higher overnight grain prices and the higher pit open.
"With excessive rains (2.00" seen in Jilin) with temps only reaching into the low 40's, this a problem for China. The weekend forecast calls for temps in to the low 30's with possible high 20's in the northern reaches of the Mongolian plains. This is a major problem for China and goes against everything they have been saying concerning production increases in both beans and corn. China is short (naturally) and wants to project an idea of stable supply...this is not justified following their problems with weather this year early with planting, drought during development and now an early frost."
Pierce adds, "Continued problems occur with MN, ND and into the S. Canadian prairies. Talk of frost this weekend has bulls out and running with the domestic story adding to the Chinese issue. Crops that were planted 2-3 weeks late in ND and S. Manitoba are in serious jeopardy of frost damage that would only add to the necessity of a monster bean crop in the central US to cover both Canadian Rapeseed reduction as well as expected EU rapeseed reduction."
Jack Scoville, PRICE Futures Group vice-president, agrees weather is a factor along with the fund-buying.
"These are pretty impressive markets today. We see breakouts on the charts and everything causing speculator and fund-buying. No real news, just the same weather issues we have been hearing about. A frost in Canada likely to stop growth up there but I would think it should not cause much if any damage. Still, this is a market where people are scared to be short so anything that creates production doubt is just feeding the bull.
"Scoville adds, "Also talk of frost in the forecast for China, plus the yield doubts for corn here, and weather issues in Argentina, Australia, and Russia supporting things."
Meanwhile, Tim Hannagan PFGBest.com senior analyst, says weather fears are playing a part in this rally. But, it's more about the fund-buying.
"Well. Everyone wants to attach something marginally related to the move to sound smart. But, the reality is, this is the eighth consecutive week where we have traded higher on Friday. And this Friday, like last week, is anticipating poor harvest yield results over the weekend. This is giving us the eighth consecutive higher Sunday night and Monday trade. Funds have developed this weekly pattern and you can expect the same next week. But, also expect some month-end profit-taking with a dip in prices after Monday."