– This is the script of CNBC's news report for China's CCTV on July 12, Wednesday.
Recently, prices of agriculture futures traded at The Chicago Mercantile Exchange have been surging, including soybean, corn and wheat futures.
Although during the previous trading session, November soybean futures saw some adjustments. However, the futures commodity has rebounded more than 14% since the end of June, when this agricultural futures hit a more than 1-year low. Now, it's trading at 4-month highs and enjoys a YTD return of 2.66%.
At the same time, soy-related futures such as Soybean Meal Futures and soybean oil futures are also seeing price increases.
Besides, since the start of June, wheat futures for the September delivery, as seen from the charts, are experiencing a sharp increase. The current price has jumped by nearly 29% since the beginning of June. And in this year alone, wheat futures increased by a whopping 31.25%.
Take a look at corn features of September delivery - has also surged by 10% after the low level since June 23rd. And in just this year alone, it has increased by 11.15%.
All these increases are largely resulted by market's worry of unfavorable weather conditions that are likely to plague America's agricultural areas. It is predicted that areas like Midwest America where mainly corn and soybean are grown and the Northern plains where mainly wheat is grown are going to experience a persisting dry spell and a sharp increase in weather temperatures. As a result, growth and production levels of corn, wheat and soybean will most likely be inhibited.
In USDA's weekly report ending 9th of July, only 62% of the domestic soybean crop was rated in "good and "excellent" condition. This was slightly lower than the expected 63% that analysts predicted and the 64% released in last week's report. Comparatively, last year, at this time, up to 71% of soybean crop was rated "good" and "excellent".
Corn is also currently going through a critical period of pollination.
Coupled with hot and dry weather conditions, this will potentially cause corn yields to plummet. Therefore, in the future, it is likely to see an increase in corn prices.
Furthermore, in recent times, we are seeing countries like Bangladesh and Sri Lanka experiencing flashfloods, causing to push up their demand for rice importing. Together with Thailand's recent decrease in rice stockpile, the price of rice has recently increased. In fact, it has already increased by 28% since end of April and it is the highest since end November 2015. Following that, investors are looking forward to potential weather changes and two reports from the USDA, namely the Supply and Demand report and production report.