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Corn, soy, wheat climb as weather risks threaten yield

06/04/2021 | 12:28pm EDT

* Weather forecasts raise yield risk for U.S. corn, soy crops

* Brazil drought set to cut corn crop, hamper river logistics

* U.S. spring wheat stress, global demand support wheat

CHICAGO, June 4 (Reuters) - Chicago corn, soybean and wheat futures gained on Friday as hot, dry conditions forecast in parts of the U.S. Midwest threatened yield potential for recently-planted crops, at a time of tight global supply after a severe drought in Brazil.

The most-active corn contract on the Chicago Board of Trade (CBOT) was up 15-3/4 cents at $6.77-3/4 per bushel by 11:18 a.m. (1618 GMT), while new-crop December corn added 18-1/2 cents to $5.85.

CBOT soybeans gained 29-1/4 cents to $15.78-1/2 per bushel, while new-crop November soybeans added 28 cents to $14.31-1/2.

CBOT wheat gained 7 cents to $6.83-1/4 per bushel, supported by an 17-1/2 cent gain in MGEX spring wheat futures to $7.95 per bushel.

Tightening global availability, linked to strong Chinese imports and deteriorating prospects for Brazil's upcoming corn harvest, have made grain markets sensitive to fluctuating U.S. weather forecasts.

"You’re going to need a record type yield for both beans and corn. The current forecast is clearly not helpful," said Terry Roggensack, Agriculture research specialist at Hightower Report.

In Brazil, crop analysts have been cutting sharply production estimates for the second annual corn crop due to drought.

However, late-planted corn in Argentina, another major exporter, is delivering higher-than-expected yields, the Buenos Aires Grains Exchange said on Thursday.

While U.S. corn and soybeans are not in crucial development stages, hot and dry conditions could whittle away yield in a year where supply is already slim, according to Charlie Sernatinger, Global Head of Grain Futures at ED&F Man Capital.

"It’s not crucial at all for the development of the plant," he said. "But this is a year when we need a trendline yield in order to break even for new crop ending stocks."

U.S. corn export sales of 970,500 tonnes gained for the week ended May 27, compared to the prior four weeks, according to the U.S. Department of Agriculture. Corn exports of 2.2 million tonnes were up 15% from the week prior and 9% higher than the previous four weeks.

U.S. soybean export sales of 198,000 tonnes were down significantly from the previous four week average, according to the USDA. Exports of 221,700 tonnes were at a marketing-year low.

Parched conditions for U.S. spring wheat contrast with generally favourable conditions for wheat in Europe and the Black Sea region.

But potentially high global wheat production this year could be absorbed as the livestock sector, notably in China, seeks alternatives to pricey and scarce supplies of corn, traders say.

U.S. wheat export sales eased to 365,100 tonnes, down from the previous four weeks, according to the USDA. Shipments of 243,200 tonnes were down 56% from the prior four-week average. (Reporting by Christopher Walljasper; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore; Editing by Kirsten Donovan)

© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
CORN FUTURES (C) - CBR (FLOOR)/C1 -1.97% 547 End-of-day quote.15.29%
CORN?FUTURES (SETTLEMENT ONLY) (ZC) - CBR (FLOOR)/C11 0.00%End-of-day quote.0.00%
EURO / ARGENTINE PESO (EUR/ARS) 0.11% 114.7691 Delayed Quote.11.61%
EURO / BRAZILIAN REAL (EUR/BRL) 2.66% 6.188 Delayed Quote.-5.00%
FEEDER CATTLE?FUTURES (GF) - CMG (ELECTRONIC)/C1 -0.27% 158.075 End-of-day quote.14.07%
LIVE CATTLE (LE) - CMG (ELECTRONIC)/C1 -0.31% 122.125 End-of-day quote.8.46%
S&P GSCI CORN INDEX -1.88% 451.5996 Delayed Quote.15.19%
S&P GSCI SOY BEANS INDEX -2.03% 535.6818 Delayed Quote.5.05%
SOYBEAN MEAL FUTURES (ZM) - CBE (ELECTRONIC)/C1 -1.09% 352.6 End-of-day quote.-17.93%
US DOLLAR / ARGENTINE PESO (USD/ARS) 0.00% 96.68 Delayed Quote.14.71%
WHEAT FUTURES (W) - CBR (FLOOR)/C1 -0.21% 703.75 End-of-day quote.9.88%
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