Indiana Grain Company, LLC

Posted: 07/15/10

By: tomgrisafi

We at Indiana Grain are contending with a bullish grain market today.

Corn prices have popped yet again and soybean futures hit a two-month high on talk of a summertime heat wave pounding and damaging crops in the U.S..

As the the biggest producer and exporter of corn, weather can be a big factor. That's exactly what we're seeing in play today.

As reported by Bloomberg, "as much as 20 percent of Midwest crops may be harmed over the next six weeks, said Joel Widenor, the director of agriculture services at the Commodity Weather Group LLC in Bethesda, Maryland. Temperatures may approach 100 degrees Fahrenheit (38 degrees Celsius) next week from Omaha, Nebraska, to Springfield, Illinois."

"People are buying because of the fear" that adverse conditions will reduce output, said Tim Hannagan, a grain analyst at PFG Best Inc. in Chicago. "A lot of consumers don't have as much corn and soybeans bought as they would like with the increased weather threats."

Corn futures are presently enjoying the biggest gains since July 7.

"In the two weeks ended July 9, the price jumped 9.6 percent after the government said that farmers planted less than they had intended this year," Bloomberg noted.

"We haven't seen this kind of weather risk to crops in several years," Hannagan said. "There was a rush of fund buying today."

Source: Bloomberg