Friday, September 17, 2010

Corn Trades at More Than $5 a Bushel for First Time Since September 2008

Corn futures climbed above $5 a bushel for the first time in almost two years in Chicago on concern that falling yields in the U.S. and higher demand from importers will erode supplies in the world’s largest exporter.

December-delivery corn advanced as much as 3.2 percent to $5.1175 a bushel on the Chicago Board of Trade, the highest price for the most-active contract since Sept. 30, 2008, and was at $5.09 at 12:25 p.m. Paris time.
“The fundamentals for corn are quite bullish for the moment,” Chung Yang Ker, an analyst at Phillip Futures Pte., said by phone from Singapore today.

Rising demand for U.S. corn exports and lower-than-expected yields may reduce the nation’s stockpiles before next year’s harvest to about 7 percent of domestic demand, the second-lowest ratio on record, according to Rabobank analysts.

That will be smaller than the 15-year low for the stocks- to-use ratio of 9.8 percent forecast by the U.S. Department of Agriculture on Sept. 10.

Corn rose for a seventh session in Chicago, the longest winning streak since June 2008. The December contract is set for a 6.4 percent gain this week.

The USDA may pare its estimates of U.S. yields in the coming months, after a very hot summer, Rabobank analysts Luke Chandler and Doug White wrote in a Sept. 16 report.

The analysts forecast yields at 161 bushels an acre, taking the nation’s crop to 13 billion bushels, down from a record 13.11 billion bushels last season, and the government’s Sept. 10 estimate of 13.16 billion bushels.

‘Major Risk’

“Further erosion of corn-production estimates in the U.S. remains a major risk for the world feed-grain market in 2010- 2011,” the analysts wrote.

December-delivery wheat gained 2.1 percent to $7.34 a bushel in Chicago, paring a weekly loss. Milling wheat for November delivery on NYSE Liffe rose 2.2 percent to 233.75 euros ($306.49) a metric ton in Paris.

The outlook for winter-wheat planting in Russia is one of “doom and gloom” as main growing regions in the Volga and Southern Federal Districts received too little rain to relieve a drought, forecaster Martell Crop Projections said yesterday.

November-delivery soybeans climbed 1.6 percent to $10.525 a bushel, set for a 2 percent advance this week.

To contact the reporter on this story: Luzi Ann Javier in Singapore at

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