Soybean and Corn futures in the U.S. settled mixed on Friday, with nearby contracts moving up on the current tight supplies.
The futures for “new crop,” which are for soybean for November and corn for December contracts, that are representative of autumn harvested crops, dropped due to pressure by the improved condition of crop for crops located in the Farm Belt. Corn for delivery in December dropped to its lowest price in 2 ½ years.
On senior analyst said that soybeans and corn are following the same type of playbook. The analysts said it is like two markets within one, with supplies that are tight supporting near contracts, while ideal weather for crops in development weighing down on the contracts for later in the year delivery.
Supplies of soybean and corn have been tight in the U.S. since last year’s harvests were reduced because of the historic drought that hit the country.
Cash markets for both commodities are currently strong, with big demand places pressure on the scarce supplies. Those two factors have supported the nearby soybean and corn futures for several months.
However, futures for new crop are lowers, as investors are bracing for soybean and corn supplies in the U.S. to be rebuilt substantially during the course of 2013.
Over the next week, weather forecasts have rainfall ranging up to two inches through much of the Corn Belt, with the heaviest falling from the southeastern part of Minnesota into Ohio.
Extended forecasts of up to 14 days are predicting the chance of rain to be above average for much of the same area. Temperatures are also expected to be slightly below average.
Analysts said the price weakness hitting prices of new crop is predicated on future weather. The crops currently developing have a favorable weather outlook for the next two weeks and that boosts the expectations that the crop production will be at record levels in the U.S.
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