The outlook for smaller crop supplies sent corn and soybean prices surging, spurring the biggest gain for raw-material prices since February.
The Bloomberg Commodity Index of 22 components rose 1.9 percent to 102.69 as of 3:30 p.m. in New York, on pace for the largest advance since Feb. 3. Corn soared the most since 2010, climbing 7.7 percent, the biggest gain among the asset class on Tuesday.
Heavy rains have slowed crop planting across the U.S. Midwest, while expanding livestock herds mean that there’s more grain being used in feed supplies. American farmers planted fewer corn acres than estimated three months ago, and domestic inventories as of June 1 were smaller than analysts were forecasting, a report from the U.S. Department of Agriculture showed Tuesday.
The USDA’s report “sent people running to the buy side,” Diana Klemme, grain-division director at Atlanta-based Grain Service Corp, said in a telephone interview. “With crop concerns and stockpiles and acres that were a little smaller than expected, apparently that was enough to send people running to the hills.”
An easing crop glut can help to pull prices out of the doldrums that many commodities have been stuck in over the past year. Corn, soybeans and wheat erased their 2015 declines on Tuesday. Sugar and cotton in June posted the biggest monthly gains since April.
Not everything is rising. Gold in New York is down 1 percent this year. The metal has fallen for four straight quarters, the longest streak since 1997, amid muted inflation and as gains for the U.S. economy curbed demand for haven assets. Copper futures also sank for four quarters, the longest slide since 2001, amid signs of slowing demand in China.