Corn, Soybeans Rally on Concern Midwest Flooding May Cut Yields

By Jae Hur

July 15 (Bloomberg) -- Corn rose after touching a one-month low and soybeans gained after a U.S. government report showed planting delays and Midwest floods in June slowed pollination and blooming, potentially reducing yields for the crops.

About 13 percent of the corn crop was pollinating as of July 13, down from 50 percent a year earlier and below the five-year average of 36 percent, the U.S. Department of Agriculture said yesterday. An estimated 26 percent of the soybeans were making flower blooms that will develop pods, down from 54 percent a year earlier and below the five-year average of 45 percent, it said.

``There's growing concern that yields of the two crops may decline further following the significantly lower ratings of corn pollination and soybean blooming,'' said Takaki Shigemoto, an analyst at Tokyo-based broker Okachi & Co.

Corn for December delivery was up 2.5 cents, or 0.4 percent, at $6.8475 a bushel at 1:28 p.m. Singapore time after falling to $6.7825 a bushel, the lowest since June 11, in after-hours trading on the Chicago Board of Trade. The contract lost 3.8 percent yesterday as a favorable mix of sunshine and rain may boost crop conditions in the U.S. Midwest.

Most-active futures still have gained 96 percent in the past year, reaching a record $7.9925 on June 27.

About 64 percent of the corn was in good or excellent condition as of July 13, compared with 62 percent a week ago and 64 percent a year earlier, the USDA said yesterday in a report. Some 59 percent of the soybeans got the top ratings, unchanged from a week ago and down from 62 percent a year earlier, it said.

Output Forecast

The corn crop will be 11.715 billion bushels, down 0.2 percent from last month's estimate of 11.735 billion and down 10 percent from a record 13.074 billion harvested last year, the USDA said July 11. The agency cut its forecast for this year's yield to 148.4 bushels an acre from 148.9 bushels a month ago.

This year's soybean crop will total 3 billion bushels, down 3.4 percent from 3.105 billion forecast in June, the USDA said. Yields are projected to fall to 41.6 bushels an acre from 42.1 bushels estimated in June. Inventories before next year's harvest will total 140 million bushels, down 20 percent the June forecast.

Soybeans for November delivery rose 8.5 cents, or 0.6 percent, to $15.675 a bushel at 1:30 p.m. Singapore time after trading between $15.5225 and $15.70. The contract fell 2.3 percent yesterday. Most-active futures have risen 80 percent in the past year, reaching a record $16.3675 on July 3.

``Although soybeans prices have been pressured lower by the improvement in Midwest weather, we believe there is less downside risk to soybean prices given the underlying supply-demand fundamentals,'' Toby Hassall, an analyst at Commodity Warrants Australia in Sydney, said in an e-mail.

Wheat Gains

Wheat for September delivery was up 5 cents, or 0.6 percent, at $8.23 a bushel at 1:14 p.m. Singapore time after declining 1.5 percent yesterday. Prices have slumped 39 percent from a record $13.495 set on Feb. 27 as higher prices spurred farmers to boost planting.

Some 61 percent of the U.S. spring-wheat crop was rated good or excellent as of July 13, down from 69 percent a week earlier, the USDA said. Temperatures were as much as 4 degrees Fahrenheit warmer than normal in parts of North Dakota and Minnesota, hurting plants that were sown late because of wet weather.

To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net
Last Updated: July 15, 2008 02:15 EDT