(Bloomberg) -- The agriculture markets are shooting back to life as disappointing acreage numbers sparked a record gain for November soybean futures and pushed two wheat contracts up by the exchange limit.
After a multi-year rout had kept prices in the doldrums, crop futures have picked up steam this month as a drought expanded across the northern reaches of the U.S. Great Plains. On Friday, the U.S. Department of Agriculture added to the supply concerns by pegging soybean and spring wheat acres below what analysts had expected.
On the Chicago Board of Trade, November soybean futures rose 3.2 percent to close at $9.5475 a bushel. Prices jumped as much as 3.6 percent, the biggest intraday gain since the contract started trading in November 2013.
Soybeans remain the No. 2 U.S. crop, based on planted acres. Analysts were expecting sowings to top corn for the first time since 1983 because of a price spread that favored the oilseed. Instead, growers planted 90.9 million acres of corn this year, exceeding all analyst forecasts.
“Farmers like to plant corn and the weather was good to add a few acres at the expense of soybeans and spring wheat,” Dale Durchholz, senior market analyst at AgriVisor LLC in Bloomington, Illinois, said by telephone. “Throw out the price ratio when farmers have open weather to plant in the Midwest.”
Soy plantings reached 89.5 million acres, the USDA said in a report. The record acreage was still less than the average forecast in a Bloomberg survey of analysts. Land devoted to spring wheat crops fell to 10.9 million acres, below the forecast of any analyst surveyed by Bloomberg. The grain seedings are down from the USDA’s March forecast for 11.3 million.
“A couple hundred thousand acres might not sound like much, but the market can’t take anymore at this point,” Jim Gerlach, president of A/C Trading in Folwer, Indiana, said by telephone. “Right now, you don’t need anything but a spark to get the wheat market flying.”
On the Minneapolis Grain Exchange, September spring wheat futures jumped as much as 7.2 percent, extending this month’s rally. Prices settled 4.4 percent higher. On the CBOT, soft red winter wheat futures for September delivery surged to settle up by the exchange’s 30 cent limit at $5.26 a bushel, and September hard red winter wheat futures also closed limit higher.
Spring wheat soared 35 percent this month as the drought in the U.S. North withered crops. The dryness may also mean smaller yields for corn and soybeans grown in the area.
“The one overriding factor the next two months is the weather,” Durchholz of AgriVisor said. “Right now it is leaning toward a more threatening outlook.”
September corn futures closed 3.1 percent higher at $3.81 a bushel. Trading volume was double the 100-day average for soybeans and soft red winter wheat, while corn and soybean meal volumes were almost double, data compiled by Bloomberg show.
Oat futures also jumped by the exchange limit in Chicago. The USDA forecast domestic acreage to drop 10 percent from a year earlier to 2.54 million.
Other highlights from Friday’s USDA reports on acreage and inventories:
- Domestic soybean stockpiles on June 1 were reported at 963 million bushels, below the average analyst estimate of 993 million. Corn and wheat stockpiles were both reported above expectations.
- States with lower soybean acreage than the USDA’s prospective plantings report in March include Kansas, Iowa, Indiana and Louisiana. Plantings in North Dakota rose.
- Corn sowings climbed in states including Iowa, Nebraska and North Dakota.
- For a table of the USDA’s plantings and stockpiles figures versus analyst estimates, click here.