Crop Markets Gripped by Bulls as Deluge Spurs Planting Chaos

Corn futures in Chicago are heading for the biggest three-day advance in nearly seven years as heavy rains and flooding roil American plantings, while worries are also mounting that some soybeans won’t get sown.

U.S. farmers, which grow a third of the world’s corn and soybeans, have faced weeks of sluggish spring fieldwork as precipitation continues across the grain belt. Just 58% of the nation’s corn crop was planted as of May 26, the lowest on record for this time of year, and the rate of soybean seedings is the least since 1990, government data released Monday showed.

The risk of shrinking production has sent crop prices climbing, and the storms have yet to abate. Parts of Iowa, Illinois and Missouri are under warnings for flash floods, according to the National Weather Service. Some farmers are running up against deadlines to plant crops and still be covered under insurance policies to protect against losses in yield and price.

“It is no longer an exaggeration to say that the corn price in Chicago is skyrocketing,” Commerzbank AG analysts said in an emailed report. “Weather forecasts do not suggest any significant change in the weather over the next few days. Accordingly, there are growing concerns about soybean planting.”

July corn futures climbed as much as 4.2% on Wednesday to $4.38 a bushel on the Chicago Board of Trade, bringing the three-session gain above 12%. The most-active contract’s rally since mid-May has lifted the 14-day relative strength index to more than 80, well above the 70 level that’s normally taken as a signal that the market is overbought.

Though the gain for soybeans, which are typically planted into June, has been less spectacular so far, prices are getting a jolt as delays persist. Futures for July delivery are trading at the highest in a month, and July wheat has soared more than 20% in May on risks the heavy rain may hurt U.S. crop quality.

The past 12 months have marked the U.S.’s wettest stretch on record. The U.S. corn planting pace released Monday trailed all analyst estimates in a Bloomberg survey and compared with 90% a year earlier. Prospects may improve in early June as the wet weather pushes farther south, though Midwest storms are set to resume afterward, according to Maxar.

Hedge funds cut their net-bearish corn position by almost 60% in the week ended May 21, U.S. Commodity Futures Trading Commission data showed on Friday, and option volumes have surged.

The dreadful U.S. weather is also jolting prices across the world. Chinese vegetable meals and oils futures surged on Wednesday and trading volumes spiked as speculation grew that feed supplies over the next year will tighten. December milling wheat futures in Paris are at a four-month high.