Grains Gain on Outlook for Supply & Demand
Crops rallied today on concerns that adverse weather in the United State would curb supply. Analysts expect that demand for grains would remain high even though prices on some agricultural commodities reached record high.
Forecasters predict that parts of US growing areas would receive rains next week, but the precipitation would light and would not alleviate the damage that drought caused to crops. The US Department of Agriculture predicted that domestic production of corn would decline 13 percent to 10.78 billion bushels this year, the lowest level in six year, and soybean yield would shrink to 2.692 billion bushels, the lowest since 2007. Other parts of the world are also having problem with their harvests. China reduced its forecast output of corn by 500,000 metric tons, according to China National Grain & Oils Information Center.
At the same time, demand for grains remains as people still need to eat, even though food prices surged. The US government report showed that amount of soybeans inspected for export increased 22 percent last week.
December futures on corn gained as much as 1.1 percent to $7.98 per bushel as of 10:01 on CBoT today, posting the first gain after three sessions of losses. Futures for delivery of soybeans in November rose 2.2 percent to $16.325 per bushel today. December futures for delivery of wheat went up 0.8 percent to $8.655 per bushel in Chicago, while yesterday the price reached $8.5725 — the lowest level since August 2.
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