U.S. grain and soybean futures surged Tuesday on renewed concerns about hot weather reducing the size of the upcoming corn harvest.
Corn for September delivery, the nearby contract, soared the one-day limit of 30 cents, or 4.4%, to $7.11 1/4 a bushel, a nearly three-week high. Corn for December delivery, the most actively traded contract, climbed 30 cents, or 4.4%, to close at a contract high of $7.15 3/4 a bushel. The rally helped lift wheat and soybean prices.
Driving gains were warnings from private weather firms that intense heat in July had lowered output. Commodity Weather Group said it cut its national yield estimate for corn to 150 bushels an acre from its previous estimate of 156.8 bushels an acre, saying crop losses "were particularly exacerbated by the record warm nights seen in many sections of the central and southwestern Midwest."
The forecaster was not alone. Cropcast Ag Services, a division of MDA EarthSat Weather, reported warm nights in July "were leading to smaller and lighter kernels and thus lower corn yields."
"Temperatures have been persistently hot across nearly all of the Midwest and Plains," said Don Keeney, senior agricultural meteorologist for Cropcast.
The warnings came after the U.S. Department of Agriculture, in a weekly report Monday, cut condition ratings for corn in several key states. The good-to-excellent rating dropped six percentage points from last week in Illinois to 53% and five percentage points in Iowa to 75%. Traders focused on the declining conditions rather than on the overall rating for the national corn crop, which stayed steady from last week.
"The state numbers seem to make sense," said Jerry Gidel, analyst for North America Risk Management Services, a brokerage in Chicago.
The USDA will update its estimates next week. The department last month pegged the average corn yield at 158.7 bushels an acre.
In other markets, soft red winter wheat for September delivery jumped 41 1/2 cents, or 6.1%, to $7.18 a bushel on spillover support from corn's gains. Soybeans for November delivery climbed 17 3/4 cents, or 1.3%, to $13.79 3/4 a bushel.
Oats for September delivery end up 2.5% at $3.54 a bushel, and ethanol for December delivery rose 3% to $2.586 per gallon. Rice for September delivery gained 0.8% to $16.37 per hundredweight. December soymeal ended up 1.4% at $365.20 per short ton, and December soyoil rose 1.7% to 57.88 cents per pound.
At the Kansas City Board of Trade, hard red winter wheat for September delivery settled up 4.8% at $8.08 a bushel. Hard red spring wheat for September delivery rose 1.8% to $8.49 1/2 a bushel at MGEX in Minneapolis.