Grain, Soybean Futures Rally

Grain and soybean futures climbed after underwhelming rainfall over the weekend, renewing jitters about the condition of U.S. crops.

Rainfall was smaller than expected in key states like Iowa, where forecasts for the next 10 days now show less rain ahead. The Commodity Weather Group expects 25% to 30% of corn and soybeans, mostly in Iowa, Illinois and the northern Plains, to be under notable moisture stress as a result. In particular, drought continues to sear crops in the Dakotas.

"The general feeling is that Iowa is the fulcrum around which the national yield will balance this year, with the regional drought in the Dakotas, [and] the east having gotten too much rain," said Charlie Sernatinger, head of grain trading at ED&F Man in Chicago, in a note to clients. "The question in front of the crop counters [is] 'will the regional drought extend into Iowa for the rest of the season?'"

Analysts also said that technical factors, with grain and soybean futures oversold after losses last week, contributed to Monday's bounce.

The corn crop is already expected to suffer as a result of dryness in the Midwest so far. Meanwhile, the coming weeks will be critical for soybean formation, analysts say. Any disruption could lead market watchers to lower their yield forecasts for the oilseed.

Traders will be looking to the U.S. Department of Agriculture's crop progress report at 4 p.m. ET to see if cooler and wetter weather last week helped crops. Analysts expect the share of corn and soybeans rated good or excellent to be largely steady from a week earlier.

Meanwhile, regulatory data on Friday that showed hedge funds cutting their overall bets that grain and soybean prices would rise also supported those markets. Money managers reduced their net long positions in corn and soybean futures and options by around 20%, according to the Commodity Futures Trading Commission, while slashing their net long in the wheat market by over 50%.

Soybean futures for September delivery rose 1.2% to $9.64 a bushel at the Chicago Board of Trade on Monday, while September corn climbed 1.6% to $3.72 1/4 a bushel. September wheat rose 1.9% to $4.63 1/2 a bushel.

Write to Benjamin Parkin at benjamin.parkin@wsj.com

(END) Dow Jones Newswires

August 07, 2017 16:14 ET (20:14 GMT)