The Bloomberg Grains Subindex is up 3.4 percent in two days, on pace for the largest such advance since mid-September. Soybean futures reached the highest since August, while corn rose to its highest this year.
The gains came one day after the U.S. Department of Agriculture predicted bigger global crop stockpiles. Even with the supply news, optimism for demand is dominating the markets after government data showed China's exports in March jumped the most in a year and declines in imports narrowed, adding to signs of economic stabilization in one of the world's largest agricultural buyers. At the same time, traders are watching potential weather concerns for the upcoming North American growing season.
"The global market reaction is a vote of confidence in the China economy and commodities in general," Bill Nelson, senior economist for St. Louis-based Doane Advisory Services Co., said in a telephone interview. "The grain markets are looking at an improving agricultural demand story in China. The forecasts for an earlier arrival of La Nina weather conditions is certainly a persuasive argument to the bulls."
Soybean futures for May delivery climbed 1.3 percent to $9.4825 a bushel at 11:19 a.m. in Chicago. Prices earlier touched $9.4975, the highest for a most-active contract since Aug. 12. In March, China's imports of the oilseed climbed 36 percent from a year earlier to 6.1 million metric tons, a record high for the month.
Corn futures for July delivery rose 3.1 percent to $3.7675 a bushel on the CBOT, after touching $3.7725, the highest since Dec. 18. Wheat prices also gained.
Trading in corn, soybeans and wheat was more than double the 100-day averages for this time of day, data compiled by Bloomberg show. Volume for soybean futures on Tuesday reached the third-highest ever, exchange data compiled by Bloomberg show.
The chances of a La Nina pattern developing this year have increased to 50 percent as the Pacific Ocean cools, Australia's Bureau of Meteorology said Tuesday. The climate pattern typically brings warm temperatures to the Midwest, according to Don Keeney, senior agricultural meteorologist at MDA Information Systems Inc. The transition from El Nino to La Nina will probably create some pockets of drought this year in U.S. growing regions, he said Wednesday in a telephone interview.