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GRAINS-Corn, soybeans approach two-week highs on U.S. weather worries

(Updates with closing U.S. princes)

By Julie Ingwersen

CHICAGO, July 14 (Reuters) - U.S. corn and soybean futures hit their highest in nearly two weeks on Wednesday as forecasts called for dry weather in the Midwest crop belt next week and continued dryness in the northern Plains, threatening crop prospects, analysts said.

Chicago Board of Trade December corn settled up 18 cents at $5.58-3/4 per bushel, after reaching $5.62-3/4, its highest since July 2.

CBOT August soybeans ended up 38-1/4 cents at $14.53 a bushel, with new-crop November up 31-1/2 cents at $13.83-1/4.

"The two-week forecast just doesn't have the rains for the northern Plains and Canada," said Dan Cekander, president of DC Analysis. While outlooks called for beneficial showers this week in portions of the Midwest corn belt, some areas may miss out.

"Next week is a dry week. You are going to be going deep into July with pretty minimal rains. It's just not ideal," Cekander said.

July is the main period for corn pollination, a key phase in determining yield, while August is more important for soybeans.

Concerns persist about drought in the northern Plains and Canada.

"Dry weather is expected to continue in the northern Plains for at least the next 10 days, which will maintain severe stress on spring wheat, corn, and soybeans ... Temperatures will also be increasing across the northern Plains next week, adding heat stress to crops," space technology company Maxar said in a daily weather note.

Minneapolis Grain Exchange spring wheat futures rose, with the benchmark September contract last up 11 cents at $8.72-3/4 a bushel after recording a life-of-contract high at $8.78-1/4.

CBOT soft red winter wheat futures posted even larger gains, with the September contract rising 20-1/2 cents to settle at $6.54-1/4 a bushel, reflecting fund-driven short-covering. Commodity funds hold a net short position in CBOT wheat, leaving that market prone to bouts of short-covering.

A setback in the dollar lent support, making U.S. grains more competitive globally. The dollar fell after Federal Reserve Chair Jerome Powell said in remarks prepared for Congress that the economy was "still a ways off" from levels the central bank wanted to see before tapering its monetary support.

(Additional reporting by Nigel Hunt in London and Naveen Thukral in Singapore; Editing by Subhranshu Sahu, Kirsten Donovan, Steve Orlofsky and Sonya Hepinstall)

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