Grain futures edge higher on unfavorable weather outlook

Grain futures rose on Monday with soybeans and corn surging more than 3.5%, while wheat advanced nearly 2% as weather forecasters continued to predict dry weather that threatened yield prospects in the U.S.

On the Chicago Board of Trade, soybeans for delivery in November rose by 3.97% to $13.8138 per bushel at 9:05 GMT. Futures surged to a 1-month high of $13.8913 per bushel earlier in the day, while days low stood at $13.4863 a bushel. The oilseed settled last week 6.2% higher after advancing 5.9% in the preceding two five-day periods.

Meanwhile, corn for delivery in December traded at $4.8738 per bushel at 9:05 GMT, up 3.70% on the day. The grain ranged between days high and low of $4.8888 and $4.7938 per bushel respectively. The contract rose more than 4% last week after gaining nearly 2% in the preceding week.

The U.S. soybeans and corn crops were well supported in the last weeks as forecasts for dry weather threatened to cut yields. DTN said on August 23 that hot and dry weather in the Midwest in the next seven-to-ten days will stress crop development. On August 12, the USDA reduced its U.S. corn output forecast to 13.763 billion bushels, 1.3% below its July estimate at 13.950 billion. Stockpiles are also poised to drop and will equal 1.837 billion bushels, 6% below July’s 1.959 billion projections. Soybeans production forecast was revised downward to 3.255 billion bushels, 5% below July’s 3.42 billion estimate, but still 8% higher than a year earlier. Yields expectations were also reduced and now stood at 42.6 bushels per acre, below the previous reading of 44.5 bushels and analysts’ projections for a 43.6 output per acre.

According to the Professional Farmers of America, which made a four-day tour last week of fields in seven Midwest states, soybean output may fall to 3.158 million bushels from USDAs 3.255 billion bushels projections. Meanwhile corn production may contract to 13.46 billion bushels, below the government agencys anticipated 13.763 billion bushels numbers.

Paul Deane, an agricultural economist at Australia & New Zealand Banking Group Ltd., said for Bloomberg: “The market’s increasingly getting a bit nervous about the soybean crop. The forecast from Pro Farmer, as the Cedar Falls, Iowa-based group is known, is only adding to sentiment.”

Elsewhere on the market, wheat also advanced and traded at $6.5700 per bushel at 9:06 GMT, up 1.64% on the day. The December contract held in range between days high of $6.5988 a bushel, the strongest level since August 5, while days low was hit at $6.5163 a bushel. The grain rose 0.52% on Friday and settled the week 0.36% higher after declining 4.3% in the preceding two five-day periods.