Bull Market In Crops Extends With Drought: Commodities

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http://www.bloomberg.com/news/2012-08-02/bull-market-in-crops-extends-with-spreading-drought-commodities.html

Corn and soybean traders are bullish for a 15th consecutive week on speculation that the drought spreading across fields in the U.S. will spur the government to make more cuts to its production forecasts.

Fourteen analysts surveyed by Bloomberg predicted soybeans will climb next week and a further seven were bearish. Twelve expect gains in corn, six saw a decline and three anticipated little change. Hedge funds are holding the biggest bet on higher corn prices since September and almost the largest wager on costlier soybeans since at least 2006, U.S. Commodity Futures Trading Commission data show.

Moderate to exceptional drought had spread across 63 percent of the contiguous U.S. by July 31, the U.S. Drought Monitor, based in Lincoln, Nebraska, said yesterday. The U.S. Department of Agriculture cut its forecast for the world’s biggest corn harvest by 12 percent last month and its outlook for the soybean crop by 4.8 percent. It next reports Aug. 10 and INTL FCStone Inc., Goldman Sachs Group Inc. and Rabobank International have said they expect output to drop further.

“Corn already has had damage taking place and we’ve seen a sizable cut in harvestable acres and yields,” said Sudakshina Unnikrishnan, an analyst at Barclays Plc in London. “The soybean market still is very, very nervous because the supply side scenario is a lot tighter.”