February 29, 2008

US corn futures surge to record highs Thursday on persistent global demand

US corn futures soared over 3 percent as crude oil peaks and world demand remains unabated. Analysts previously predicted large wheat buying and corn selling, yet gears shifted Thursday when corn prices towered anew.

Gavin Maguire, analyst for Iowa Grain, said the firmness in crude oil was definitely supportive of corn. He expects traders to unwind their short corn, long wheat spreads.

Chicago Board of Trade corn closed 5-1/2 to 18-1/4 cents per bushel higher, with March futures up 18-1/4 at US$5.43-1/4 per bushel.

The July contract leaped to a record high US$5.81-1/4 per bushel.

Traders pointed that the feverish export demand for corn continues to propel prices, despite the growing focus on the highly volatile wheat futures market.

Brokerage firm, MF Global, announced Thursday a US$141.5-million bad debt provision, saying that a representative traded in the wheat futures market using his personal account and substantially exceeding his authorized trading limit.

Industry players explained that some traders had been buying wheat and selling corn but recoiled many of those positions on Thursday, pressuring wheat prices and boosting corn prices.

US analysts said demand for corn remains brisk, amidst a series of rallies in CBOT corn futures to record highs.

The USDA reported last week that export sales of US corn totaled 776,100 tonnes, within estimates for 650,000 to 950,000 tonnes.

Attention South America remaines, where scattered showers over the past 24 hours in Argentina's crop region buoyed crop prospects, DTN Meteorlogix said Thursday.

Argentina is the second largest exporter of corn, after the US.