May 19, 2011

 

CBOT corn futures soar as US planting delays threaten yields

 

 

CBOT corn rose the most in six weeks, wheat had the biggest gain in two months, and soy prices surged as adverse weather in the US to Europe threatened to erode crop production.

 

In the US, corn planting was 63% complete as of May 15, down from the 75% average in the past five years, as soggy fields hindered fieldwork, mostly east of the Mississippi River and in northern US states, government data showed. Spring-wheat, soy and rice sowing also were behind the pace of recent years. The Ohio Valley and North Dakota will see more rain this week, AccuWeather Inc. said.

 

"The weather looks to be a little more threatening on planting progress," said an analyst. "Western Minnesota, South Dakota and North Dakota could start seeing clouding conditions today, and rain starting as early as tonight and into tomorrow."

 

CBOT corn for July delivery climbed 29.5 cents, or 4.1%, to settle at US$7.4975 a bushel. Earlier, the price rose by the exchange limit of 30 cents. The grain has more than doubled in the past year on tightening global supplies and increasing demand from ethanol producers and livestock farmers.

 

The US is the world's leading exporter of corn, soy, and wheat.

 

Wheat futures for July delivery surged 53 cents, or 6.9 %, to US$8.17 a bushel in CBOT, the biggest jump since March 17. The price has climbed 75 % in the past year as drought slashed crops in Russia and threatened production in the US Great Plains.

 

Wheat futures in Minneapolis rose 6.4%, and prices in Paris gained 4.6%.

 

Europe's crop, making up a fifth of global output, is under threat in the UK, France, and Germany from the driest growing conditions in at least 36 years. France, the world's second- largest exporter, may produce 12% less this year compared to 2010, analysts said.

 

In the US, 36% of spring-wheat crops had been planted as of May 15, compared with the average of 76% for the previous five years, according to the Department of Agriculture. Wet weather is delaying fieldwork in Manitoba and Saskatchewan, the Canadian Wheat Board said.

 

Soy futures for July delivery rose 38.5 cents, or 2.9%, to US$13.795 a bushel on the CBOT, the biggest gain this month. The oilseed has climbed 47% in the past 12 months.

 

Rice futures for July delivery jumped by the exchange limit of 50 cents, or 3.5%, to US$14.89 per 100 pounds, the largest increase since April 25. The price has gained 6.7% in the past week.

 

Flooding along the Mississippi River may cut planting in Mississippi and Arkansas, the biggest US grower, by 100,000-300,000 acres, Delaughter said. The USDA already has forecast that the nation's output will decline 10% this year to 6.77 million tonnes from a year earlier.

 

"No doubt we'll see a lower supply than what the USDA had on its last supply-and-demand report," Delaughter said. "We obviously have a serious problem."

 

Corn is the biggest US crop, valued at US$66.7 billion in 2010, followed by soy at US$38.9 billion, government figures show. Wheat was fourth at US$13 billion, behind hay.