Corn jumps on cutback in US forecast

Corn rose for a sixth day to a record in Chicago, leading gains in soybeans, wheat and rice, after the United States cut its output estimate by 3.2 percent from a May forecast.

Output will be 11.735 billion bushels, compared with 12.125 billion forecast on May 9, the US Department of Agriculture said in a report. The estimate is 10 percent smaller than last year. Inventories in the world's biggest producer may drop to the lowest since 1996 by Aug 31, 2009, the USDA said.

Corn prices have climbed 50 percent this year, heading for a fourth straight annual gain, as demand surged for livestock feed and biofuels. Global inventories are forecast to fall to a 24- year low, the US government said. The price of wheat, rice and soybeans also reached records this year after adverse weather curbed global output, reducing stockpiles amid rising demand.

"No one can stop the corn price's run-up now," Hiroyuki Kikukawa, general manager of research at IDO Securities Co, said yesterday. "Now we have heavy rains in the Midwest and will see a summer heat wave in July and August. We may see the USDA cut further its output estimate next month."

Corn for July delivery rose as much as 13.25 cents, or 2 percent, to $6.865 a bushel in after-hours trading on the Chicago Board of Trade and was at $6.835 at 11:59 am in London. The new crop December contract climbed as high as to $7.12 after closing above $7 on Tuesday for the first time.

Shrinking stockpiles

Estimated US inventories of 673 million bushels before the 2009 harvest, down 53 percent from a year earlier, would represent 5.4 percent of expected annual consumption, or 20 days of use. That's down from 40 days estimated this year and the lowest since 1996 when reserves were projected to last 18 days.

The government cut its yield forecast for corn by 3.2 percent to 148.9 bushels an acre, from 153.9 predicted last month and 151.1 for last year's crop. The reduction reflects "persistent heavy rainfall across the Corn Belt", the USDA said. The crop will be harvested by November.

About 60 percent of the corn crop in the US, the largest exporter of the grain, was in good or excellent condition as of June 8, down from 63 percent a week earlier, and 77 percent a year earlier, the USDA said June 9 in a report.

An estimated 89 percent of the corn crop had emerged from the ground as of June 8, compared with 98 percent a year ago and the five-year average of 89 percent, the USDA said.

Soybeans gain

Rainfall across the Midwest was as much as four times normal during the past 60 days, National Weather Service data showed. Midwest fields had as much as 30 centimeters of rain in the past week, it showed. Soybeans for July delivery added as much as 22 cents, or 1.5 percent, to $14.685 a bushel, and last traded at $14.63. The contract rose 7.4 percent this month, on track for the third straight monthly gain.

Soybean inventories on Aug 31 are expected to be 125 million bushels, down from last month's forecast of 145 million and a record 574 million last year, the USDA said.

Reserves on Aug. 31, 2009, are expected to be 175 million bushels, down from 185 million forecast last month even with the USDA predicting a 20 percent jump in US production.

Wheat for July delivery was up 8 cents, or 1 percent, at $8 a bushel after gaining 2.6 percent on Tuesday on speculation that record corn prices may force livestock producers to use more feed wheat.

Still, wheat futures are down 41 percent from a record $13.495 on Feb 27 as farmers increased seeding of the grain.

Agencies

(China Daily 06/12/2008 page17)