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Corn up most since 2008, soy surges on US drought

Soybeans drew further support from a tight cash market, while traders also cited a jump in the euro after European leaders agreed to allow rescue funds to stabilize the region’s banks.

The higher euro pressured the dollar, making goods priced in the greenback more attractive to importers. Crude oil gained more than 9 percent, leading a cross-commodity surge.

New-crop corn futures pared gains to close slightly higher, losing ground to old-crop corn futures after the US Agriculture Department trimmed its stockpile estimate of the grain. Spot corn jumped more than 17 percent in June, the best performance since December 2010, while new-crop December gained 15 percent this week alone, the most for that contract month since 2008.

USDA, in its annual acreage report, said farmers planted more corn and soybeans than traders had expected, with the corn area the largest since 1937 and soy the third highest ever.

But the harvests were in doubt as drought during corn’s pollination stage was widely viewed likely to reduce yields, with the government earlier this week saying conditions of the corn and soy were the worst since the historic drought year of 1988.

“Weather trumps the report,” said Don Roose, an analyst with US Commodities in West Des Moines, Iowa. “We traded the report for probably 30 seconds and then we went back to trading the weather. These are past numbers. With the weather, we may not get the bean acres and you may have abandonment on some of the corn acres.”

Corn for December delivery settled 2-1/2 cents higher at $6.34 per bushel at the Chicago Board of Trade, just shy of this week’s 9-month high, while July corn rose 20-1/2 cents to $6.72-1/2.

July soy ended up 46-3/4 cents at $15.12-3/4, highest since July 2008. The front-month July contract gained nearly 13 percent for the quarter, up the most since the fourth quarter of 2008. New-crop November soybeans were up 24-1/4 cents higher at $14.27-3/4.

Aided by a mild spring, US farmers planted 3 percent more soybeans than they initially planned and slightly more corn, but in a tacit recognition of the drought, USDA said 8 percent of corn land would not be harvested, up 1 percentage point from a projection made two weeks ago.

Rains moved through the top two corn and soy producing states of Iowa and Illinois, respectively, on Friday, even as meteorologists forecast mostly hot and dry weather for at least another week.

“If we can take the weekly highs out this afternoon, with the radar potentially full of rains, and the report that didn’t feed the bull, then it suggests the market has got more lift to it,” said Mike Zuzolo, analyst at Global Commodities Analytics, referring to the USDA reporting being termed largely neutral by traders.

Bids for soybeans in the export markets at the US Gulf Coast rose to the highest level since February amid tight supplies in the pipeline, traders said.

“(We were) off to the races again with a short squeeze on the July leading the way,” ABN Amro analyst Charlie Sernatinger of the move in soybeans. “Why sell a higher acreage number when it’s burning up now anyway?”

CBOT July wheat futures finished 13 cents higher at $7.39 per bushel, following gains in corn and rising nearly 12 percent in the quarter for the best performance since the fourth quarter of 2010.

Investment funds were said to have bought 7,000 soybean contracts; 5,000 corn contracts and 4,000 wheat contracts. Prices at 3:57 p.m. CDT (2057 GMT)