U.S. corn futures jumped six per cent on Monday for their biggest gains since July, bolstered by a historically slow start to the planting season in the world's top food exporter while weakness in the dollar spurred investment buying across commodities.
Corn futures rose their US40-cent daily trading limit while wheat and soybeans posted their biggest gains in weeks as the value of the dollar eroded and investors counted on easy money from the U.S. and euro zone central banks to offset the risk of a disappointing global economic recovery.
Weak first-quarter U.S. economic growth data on Friday was seen as a signal the Federal Reserve would keep injecting cash into the economy. A weak dollar makes U.S. commodities more competitive on the world market and acts a buy signal to commodity traders.
Chicago Board of Trade (CBOT) corn futures for July delivery, the most actively traded grains contract, closed 40 cents higher at $6.59-3/4 per bushel, the highest level since March 28 (all figures US$).
December corn, which reflects the harvest of a new U.S. crop, ended up 35-1/2 cents at $5.59-1/2, a gain of 6.8 per cent -- the largest in the life of the contract dating back more than two years.
U.S. Department of Agriculture data after the close of trading pegged corn plantings at five per cent complete, below the range of analyst estimates and matching the slowest pace on record from 1984. Corn plantings last year were 53 per cent done.
Investment funds were said to have bought 26,000 corn contracts during the session, the most this year.
The front end of the corn futures curve is supported by a tight supply of grain after drought slashed 2012 output and hopes remain high that this year will be bin-buster.
But one of the coldest, wettest springs in recent years is raising the risk that corn will not be planted by the optimal date of May 15. Farmers have already been hesitant about selling any of their crops left over from last year and this season's spring planting delays kept them edgy.
"There's not going to be selling until they get some crop in the ground. That's why the front end is leading," said Rich Feltes, vice-president of commodity research with RJ O'Brien, a major agricultural futures brokerage.
Corn futures sank to a 10-month low earlier this month after USDA said farmers would plant the largest corn area since 1933.
Speculative investors, including hedge funds, liquidated their bullish bets in the weeks since the March 28 government crop report, last week expanding their net short stake in the market to the largest in three years.
Many investors were betting on return to beneficial growing conditions after last year's worst drought since 1934 reduced yields at harvest and pushed corn futures to a record last August.
USDA in March estimated the existing supply of the yellow grain as the smallest in nine years, with the new-crop harvest needed to replenish stockpiles.
"Sentiment has shifted from drought relief to the possibility of a major problem at the same time funds increased their net short position in corn. Significant amount of short-covering support to follow," said Ken Smithmier, analyst at the Hightower Report in Chicago.
Drier and warmer weather early this week will allow U.S. farmers to plant corn, but another round of showers is expected beginning near midweek, said John Dee, agriculture meteorologist for Global Weather Monitoring.
"We'll start out in OK shape, then late Tuesday into Wednesday rains begin in the west and spread to the east by Thursday and Friday," Dee said.
CBOT July wheat futures finished 24 cents, or 3.5 per cent, higher at $7.16-1/2 per bushel. CBOT July soybeans ended 27-3/4 cents, or two per cent, higher at $14.08-3/4.
Wheat was underpinned by concerns that crop scouts on a tour this week will find freeze-damaged wheat fields in the top growing state of Kansas.
Crop scouts -- agronomists, wheat buyers, millers and bakers -- will survey wheat fields in Kansas in the annual Wheat Quality Council tour beginning on Tuesday.
The scouts are expected to find fields damaged by the one-two punch of drought and April frosts.
-- Michael Hirtzer covers ag commodity markets for Reuters in Chicago. Additional reporting by Christine Stebbins, Mark Weinraub and Sam Nelson in Chicago.