April 16, 2008

US corn planting off to a sluggish start

Wet weather has slowed down US corn planting, renewing its rally at the Chicago Board of Trade (CBOT) as corn futures were up by 2 percent on Tuesday (April 15), with the deferred July 2009 contract setting an all-time high at $6.43 per bushel.

 In its first crop progress report, the US Department of Agriculture on late Monday (April 14) said that 2 percent of the US crop had been planted, compared with 4 percent a year ago and lagging the five-year average of 7 percent.

It was the slowest start for US corn planting since 1993, said Wachovia Securities analyst Bill Nelson in St. Louis.

Farmers had hoped to get an early start with fieldwork to maximize yield potential. Supply issues will be the key this season on strong demand for corn from the livestock, ethanol and export sectors. USDA projects an 8 percent drop in con seedings in 2008.

The front May contract reached $6.09-1/2, nearing the record high for a front month of $6.16, set last week.

So far, corn futures climbed 30 percent this year.

Nelson said there will be a "real struggle with few supplies from US and from the major corn producing countries.

On the other hand, CBOT May wheat was up 10 cents at US$9.06 per bushel, following the firm trend in corn and rice.

Wheat also drew support from reminders of scarce global supplies. Kazakhstan on April 15 joined other Black Sea grain exporters in curbing shipments, suspending wheat exports until September 1 to combat double-digit inflation.

Soy futures for May were up 17-1/2 cents at US$13.90 per bushel on prospects for an extended stretch of US export business due to concerns about supplies from Argentina, where talks continue between the government and farm workers after a recent strike restricted supplies.

Sources familiar with Chinese government trading said Beijing had bought 150,000 tonnes of soyoil and 300,000 tonnes of soybeans for state reserves last week.