U.S. grain and soybean futures jumped Tuesday on worries declining crop ratings will lead to smaller-than-expected harvests.
Corn for December delivery, the most actively traded contract, closed up 12 1/4 cents, or 1.8%, at $6.86 3/4 a bushel at the Chicago Board of Trade. Soybeans for November delivery jumped 16 3/4 cents, or 1.2%, to $13.88 3/4 a bushel. Soft red winter wheat for September delivery advanced 5 1/2 cents, or 0.8%, to $6.94 a bushel.
Driving prices higher were a four-percentage-point cut in the U.S. Department of Agriculture's weekly good-to-excellent rating for the corn crop and a two-percentage-point cut in the rating for soybeans. The declines, attributed to last week's intense heat, raised concerns poor weather will reduce output at harvest in the autumn.
The good-excellent rating for corn is down 10 percentage points from last year, but the USDA's yield estimate of 158.7 bushels an acre is up almost six bushels an acre from last year. That leads market participants to "believe the yield numbers have nowhere to go but down," said Tim Hannagan, analyst for PFG Best, a brokerage in Chicago.
Traders are paying close attention to the weather because farmers need favorable conditions to grow large crops to replenish low inventories. Corn prices have pulled back nearly 14% since reaching an all-time high in early June on supply concerns. Yet, users of the grain remain uncertain about the outcome of the crop.
Wheat lagged behind the corn and soybeans due to lackluster demand. Egypt, the world's top wheat importer, bought 120,000 metric tons of Russian wheat in a tender and none from the U.S.
Ethanol for December delivery rose 1.9% to $2.575 per gallon, and oats for September delivery finished up 1.4% at $3.56 1/4 a bushel. Rice for September delivery edged up 0.3% to $17.21 per hundredweight. December soymeal ended up 1.7% at $369.30 per short ton, while December soyoil gained 0.9% to 57.47 cents a pound.
At the Kansas City Board of Trade, hard red winter wheat for September delivery advanced 1.3% to $7.80 1/2 a bushel. Hard red spring wheat for September delivery rose 1% to $8.39 a bushel at MGEX in Minneapolis.