Corn, soybeans hit new multi-year highs on weather, supply risks

Corn market frets on U.S. cold, Brazil drought

  
Soybeans in a field on Hodgen Farm in Roachdale, Indiana, U.S. November 8, 2019.Image used for illustrative purpose.

Soybeans in a field on Hodgen Farm in Roachdale, Indiana, U.S. November 8, 2019.Image used for illustrative purpose.

REUTERS/Bryan Woolston

PARIS/SINGAPORE- Chicago corn extended a rally on Wednesday to set another near eight-year high as unfavourably cold weather for U.S. planting and drought in part of Brazil raised doubts about harvest prospects at a time of declining global availability.

Soybeans also remained firm, touching another highest since mid-2014 as the risk of cold weather hampering U.S. planting added to support from tight short-term supplies in oilseed and vegetable oils.

Wheat also rose, drawing support from corn and from concern about cold damage to some U.S. winter wheat.

The most-active corn contract on the Chicago Board of Trade (CBOT) was up 0.6% at $6.10 a bushel by 1131 GMT, after hitting its highest since June 2013 at $6.14-1/2 a bushel earlier in the session.

"I think it comes down to crop delays and uncertainty in a market already thin on supplies," Michael Magdovitz, commodity analyst at Rabobank, said of corn.

"In a season where you need everything to go right, it's not a great start."

Freezing conditions in U.S. grain belts this week have raised concern about delays to corn planting and crop emergence, while limited rain forecasts for southern Brazil were creating doubts about current estimates of bumper corn production. 

Corn may test a resistance at $6.42-1/2 in one or two weeks, a break above which could lead to a gain to $7.21-1/2, Wang Tao, a Reuters analyst for commodities technicals, said.

CBOT soybeans were up 0.1% at $14.59-1/2 a bushel, paring gains after earlier climbing to their highest since June 2014 at $14.72-1/4.

CBOT wheat gained 1.0% to $6.67-1/2 a bushel.

In a sign of tightening availability of corn and soy, China's agriculture ministry published guidelines on Wednesday for the reduction of corn and soymeal in pig and poultry feed. 

"There is definitely a longer-term underlying bullish story, although the rally on the back of U.S. weather has come too early," said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.

Tensions in related vegetable oil and biodiesel markets added to the strength in soybeans. The CBOT front-month soybean oil contract earlier struck a 10-year high at 59.66 cents per lb.

(Reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore; Editing by Subhranshu Sahu, Alexander Smith and Steve Orlofsky) ((gus.trompiz@thomsonreuters.com; +33 1 49 49 52 18; Reuters Messaging: gus.trompiz.thomsonreuters.com@reuters.net))

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