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 But demand for U.S. exports probably will not surge as the weather
worries spread beyond the farmhouses and coffee shops of the rural
Midwest. There is still plenty of cheaper grain available from other
countries.
Weather in the fertile grain belt of the United States is critical
to prices and the flow of food around the world. Recent storms have
dumped double the normal rainfall on much of eastern Missouri,
Illinois, Indiana and western Ohio, MDA Weather Services said.
This has delayed planting of the last 10 percent or so of the
soybean crop, and could reduce the size of the autumn corn and
soybean harvests.
December corn futures are up more than 9 percent so far this month,
on track for one of the strongest June rallies in decades due to
worries about reduced yields.
In past years, unfavorable weather has spurred export sales of U.S.
crops because buyers have worried about tightening supplies.
However, after record-large U.S. corn and soy harvests last year,
global stockpiles are ample to compensate for any weather-related
losses.
Kent Hamm, a general manager of grain elevators in Illinois, said a
buyer in Taiwan contacted him on Friday with the first international
question he has received this year about the coming crop. Still, he
is not expecting big sales.
"From an export standpoint, the buyers have less concern over the
yield losses because the other origins are cheaper already," Hamm
said.
Taiwan's MFIG purchasing group bought 130,000 tonnes of corn from
Brazil on Thursday after also considering supplies from Argentina
and the United States, traders said.
Corn shipped out of the U.S. Gulf Coast is as much as $15 per tonne
more expensive than grain from the Brazilian port of Paranagua,
according to Reuters data.
New-crop corn is on track for its sixth-strongest June rally since
1973, soybeans for their fifth-strongest. On Friday, December corn
futures, the contract that represents the autumn harvest, topped $4
a bushel for the first time since April in record volume at the
Chicago Board of Trade.
With such high futures prices, export demand for new-crop U.S. corn
and soybeans is the lightest since 2010. With grain stocks well
above last year's levels, importers are in no rush to overbook
purchases for post-harvest shipment.
As of June 18, forward sales of corn for export in the September
2015 to August 2016 marketing year were 41 percent below the prior
three-year average for that date, according to U.S. Department of
Agriculture data, at 2.8 million tonnes. The 6 million tonnes of
soybeans sold for export are just under half the prior three-year
average.
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"In corn, we are overpriced versus Brazil, Argentina, Ukraine, and
Paraguay is even selling corn cheaper than us," said Jim Gerlach,
president of A/C Trading in Indiana.
Some grain dealers are seriously worried about yield losses because
of the hefty downpours.
Brent Baker, a risk manager for John Stewart & Associates in St.
Louis, started receiving calls from food companies last week asking
whether prices had bottomed and if buyers should start pricing some
corn for purchase.
"There is a ton of grain in storage, but I think we're probably
going to see offsets here with the amount of yield loss," he said.
Still, weather and history are on the side of those expecting big
harvests.
Since 1960, eight of the 11 wettest summers for corn and seven of
the 11 wettest summers for soybeans have produced above-average
yields, said Gerlach, of A/C Trading.
Corn prices tend to build upon June rallies only in drought years,
and long-range weather forecasts predict largely favorable Midwest
crop weather this summer due to a developing El Nino weather system
over the Pacific.
"We lean toward it being an above-average year for the Corn Belt,"
said Elywnn Taylor, a well-known professor of agriculture
meteorology at Iowa State University. (Additional reporting by
Michael Hirtzer and Mark Weinraub in Chicago; Editing by David
Gregorio)
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