June 9, 2008

US corn futures rise as rains dim crop prospects

The US corn rose to a record on Friday (June 6, 2008) after excessive Midwest rains flooded fields and delayed planting.

Gail Martell, a meteorologist for Storm Exchange in Milwaukee, said that some fields in Nebraska and Ohio have received more than 6 inches of rain last week.

An additional 2 inches to 4 inches will keep soils too wet for planting and drown already seeded fields, Martell explained.

The crop conditions are going backwards very fast and prices are going to keep rising until the rain stops, Don Roose, president of US Commodities Inc. in Iowa, said.

US corn futures for July delivery rose 10.25 cents, or 1.6 percent, to US$6.535 a bushel on the Chicago Board of Trade, after earlier reaching US$6.6325, the highest ever.

Corn has gained 9.1 percent this week, which would be the biggest weekly gain in 10 weeks.

Fred Gesser, a senior agricultural meteorologist for Planalytics, said some of the top yielding areas of the Midwest may be in for another two weeks of rain, which will delay crop development and increase the yield risks from hot, dry weather in July, he said.

When the rains abate later this month and the jet stream moves north, the risk of temperatures as much and 6 degrees Fahrenheit above normal will develop in July with generally dry conditions from Texas to Minnesota, Gesser said.

The delays in planting is expected to prompt the government to reduce its corn yield forecast from 153.9 bushels per acre, said Richard Feltes, a vice president and director of MF Global Research in Chicago.

Meanwhile, soy reached a three-month high. US soy futures for July delivery rose 18.75 cents, or 1.3 percent, to US$14.7075 a bushel in CBOT, after earlier touching US$14.88, the highest for a most-active contract since March 6.