September 21, 2010

CBOT corn rises to highest in two years

On September 20, corn rose to the highest level in almost two years on concern US production may decrease because of lower yields.

December-delivery corn gained as much as 2.1% to US$5.2375 a bushel, the highest price since September 30, 2008, and was at US$5.22 on the Chicago Board of Trade at 2:14 p.m. Paris time. Soy advanced as much as 2.9% to the highest price since June 12, 2009. In China, corn touched a record and soy was the costliest since January.

Corn may reach US$5.75 a bushel as output drops in the US, the world's largest grower and exporter, Macquarie Group Ltd. forecast in a report September 17. Russian farmers have sown 39% less land with winter grains compared with a year earlier because of dry weather.

"We have got concerns emanating out of the US that their US corn-production numbers may not match expectations," said Luke Mathews, commodities strategist at Commonwealth Bank of Australia. Corn futures have surged about 40% so far this quarter, set for the biggest three-month gain since 2006.

US farmers will harvest 12.936 billion bushels this year, down from a record 13.11 billion last year and less than the USDA's forecast of 13.16 billion, after hot weather in August, Macquarie's Alexander Bos said. Yields will fall on average to 159.7 bushels an acre from 164.7 bushels last year, he said.

US corn yields will fall to 162.5 bushels an acre, down from 164.1 bushels forecast on August 20, Professional Farmers of America said September 17. The revised forecast is in line with the outlook from the USDA.

There is growing speculation of a decline of the US corn harvest potential, Paris-based farm adviser Agritel said on its website.