Edmonton Journal

Downpours and drought grow crop prices

Wheat, corn prices experience biggest rally in three years


Toomuchrai­nintheU.S.and not enough in Europe and Canada sparked the biggest weekly rally in wheat and corn prices in three years.

Wheat futures jumped 14 per cent in Chicago this week, and are poised to enter a bull market. Corn climbed 8.3 per cent and milling wheat added 8.2 per cent in Paris. The advances are the largest since 2012. Soybeans heading for the biggest gain since October.

Downpours across the U.S. Midwest and Plains are eroding grain quality, while fields in France and Canada have been parched by heat and dry weather.

The El Nino developing across the Pacific risks cutting Australia’s wheat crop to the smallest in eight years, according to National Australia Bank Ltd.

“Market participan­ts just don’t know how much damage the adverse weather will cause, and that has created some panic buying,” Gordon Linn, the president of Linn & Associates in Chicago, said. “Emotional markets tied to weather will be very volatile. June weather rallies rarely continue through July.”

Parts of the U.S. Midwest received three times more rain than usual this month, and Illinois is headed for the wettest June since before 1895, according to Chicagobas­ed forecaster T-Storm Weather LLC. U.S. winter wheat, corn and soybeans classified as good or excellent all fell two percentage points on June 21 from a week earlier, and conditions should show further losses in Monday’s update from the government, Linn said.

Wheat futures for September delivery rose 4.7 per cent to $5.635 a bushel at 10:37 a.m. on the Chicago Board of Trade. A settlement at that level would leave prices up 21 per cent from the closing low on May 5, meeting the common definition of a bull market.

Corn futures for September delivery climbed 1.5 per cent to $3.885 a bushel on the CBOT.

Crops in parts of Europe and Canada aren’t getting enough rain, and the hot weather next week will threaten to reduce yields, Commodity Weather Group LLC said in a report Friday. Top soils were dry in Saskatchew­an, Canada’s biggest wheat-growing region, with crop developmen­t delayed, according to the province’s agricultur­e ministry.

In France, Europe’s biggest wheat and corn grower, maximum temperatur­es in the south and centre regions may exceed 35 C from Wednesday, Meteo-France predicts.

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