Chicago | Reuters — U.S. corn futures extended a rally on Wednesday to their highest in more than three months after a steeper-than-expected reduction to the U.S. government’s 2020 corn acreage estimate, analysts said.
Soybeans and wheat gained after the U.S. Department of Agriculture’s acreage report on Tuesday also showed smaller-than-expected plantings of the grains.
Chicago Board of Trade September corn settled up nine cents at $3.50-1/2 per bushel, after reaching $3.53-3/4, the contract’s highest since March 31 (all figures US$).
CBOT August soybeans ended up 12-3/4 cents at $8.91-1/2 per bushel after reaching $8.94, the contract’s highest since March 30. September wheat ended up seven cents at $4.98-3/4 a bushel.
USDA on Tuesday said U.S. farmers planted 92 million acres of corn this spring, well short of analyst expectations and 5 million acres below USDA’s March forecast of 97 million acres — the biggest March-to-June drop since 1983.
The data came at a time when commodity funds hold a large net short position in CBOT corn, leaving the market vulnerable to bouts of short-covering.
“Funds are short almost 300,000 corn contracts. A little surprise would’ve sparked a lot of buying, but we had a huge surprise, and it has real impact on the stocks outlook,” said Terry Roggensack, analyst at the Hightower Report.
Hot, dry weather forecasts across the U.S. Midwest have also elevated concern about crop stress as U.S. corn and soybeans move into key summer growth stages.
“We have a hot, dry forecast for the next few weeks as well. We’ll be catching some corn in the tasseling stage and the pollination phase,” said John Zanker, market analyst at Risk Management Commodities.
“If you come in Monday and that forecast still hasn’t changed from hot and dry, we’re going to probably touch $3.75 December futures next week. That’s just something we weren’t thinking about two days ago.”
— Reporting for Reuters by Christopher Walljasper; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.