Monday, U.S. soybeans soared nearly 3 percent to a one-week high after disappointing weekend rains in the Midwest farm belt and forecasts for hot and dry weather for the next two weeks when the crop sets pods, a critical stage for yields.
The worst U.S. drought in five decades has fired up grains markets the past six weeks, lifting corn and soybean prices to record highs while wheat has rallied to the highest level in 4 years aided by concerns over dry weather in southern Europe.
Weekend rains in the southwestern Corn Belt, especially Illinois, typically the No. 2 grain state after Iowa, were less than expected. Temperatures were seen in the mid-90s to low 100s degrees Fahrenheit over one-third of the southwestern Midwest covering Missouri, Illinois, Iowa, Kansas and Nebraska.
Next week, temperatures are expected to be 95 to 105 degrees F over half of the southwestern Midwest. "This will contribute to additional soybean losses," said Commodity Weather Group in its weather update Monday morning.
Soybeans at the Chicago Board of Trade, which slipped marginally last week on profit-taking after hitting a record high $17.77-3/4 per bushel on July 20, were tracking their biggest monthly gain in percentage terms since October 2006.
"Soybeans are shrinking before our eyes," said grains analyst Rich Feltes of RJ O'Brien in Chicago. "Rains over the weekend were less than expected and there are forecasts for dry weather during the three most critical weeks for soybeans."
New-crop December corn futures have rallied 49 percent over the past six weeks, while November soybeans have gained 20 percent. Benchmark September wheat have surged 40 percent but remain under the 2008 high above $13 per bushel.
On Monday, Chicago Board of Trade new-crop December corn rose 2.8 percent to $8.15-3/4 a bushel by 1355 GMT, after touching a contract high of $8.17-1/4 a bushel. November soy rose 2.7 percent to $16.44.