Corn rises, capping the biggest weekly gain
Monday, 19 April 2010
SINGAPORE, April 18 (Bloomberg): Corn rose, capping the biggest weekly gain in two months, on speculation that cooling Pacific Ocean waters will boost the odds for a drought in the US Midwest, reducing yields in the country's biggest crop.
Some meteorologists were predicting that an El Nino weather pattern, which involves warming equatorial Pacific waters, would bring excess rain. Instead, the pattern is weakening, increasing the chance of drought in North America to about 20 per cent, from 17 per cent in a normal year, said Elwynn Taylor, an agricultural meteorologist at Iowa State University in Ames.
"Some traders are starting to bet on a hot, dry weather pattern this summer," said Jerry Gidel, a market analyst for North American Risk Management Services Inc. in Chicago. "There's increased speculation the El Nino will die quickly this year," increasing the odds for damaging weather when corn is maturing in July, Gidel said.
Corn futures for July delivery rose 0.25 cent to $3.74 a bushel on the Chicago Board of Trade, capping a weekly gain of 4.7 per cent, the most since Feb. 12.
The 90-day average Southern Oscillation Index for barometric pressure in the Pacific Ocean at points along the Equator dropped to a negative 8.61 today, from negative 13.43 on March 17, according to data from the Queensland Department of Environmental and Resource Management in Australia.
The drop in the index and the weather patterns in the past six months are similar to what occurred in 1982-1983, when drought quickly developed in the Midwest in May and June, Iowa State's Taylor said. Corn yields tumbled 28 per cent in 1983 from a year earlier and soybean yields dropped 17 per cent.
Some meteorologists were predicting that an El Nino weather pattern, which involves warming equatorial Pacific waters, would bring excess rain. Instead, the pattern is weakening, increasing the chance of drought in North America to about 20 per cent, from 17 per cent in a normal year, said Elwynn Taylor, an agricultural meteorologist at Iowa State University in Ames.
"Some traders are starting to bet on a hot, dry weather pattern this summer," said Jerry Gidel, a market analyst for North American Risk Management Services Inc. in Chicago. "There's increased speculation the El Nino will die quickly this year," increasing the odds for damaging weather when corn is maturing in July, Gidel said.
Corn futures for July delivery rose 0.25 cent to $3.74 a bushel on the Chicago Board of Trade, capping a weekly gain of 4.7 per cent, the most since Feb. 12.
The 90-day average Southern Oscillation Index for barometric pressure in the Pacific Ocean at points along the Equator dropped to a negative 8.61 today, from negative 13.43 on March 17, according to data from the Queensland Department of Environmental and Resource Management in Australia.
The drop in the index and the weather patterns in the past six months are similar to what occurred in 1982-1983, when drought quickly developed in the Midwest in May and June, Iowa State's Taylor said. Corn yields tumbled 28 per cent in 1983 from a year earlier and soybean yields dropped 17 per cent.