April 28, 2011

CBOT corn advances as US mid-west may face severe flooding

CBOT corn advanced as rains in the Midwest, the largest US growing region, threatened to further delay sowing, while cold temperatures may hurt the crop that's already been planted.

July-delivery corn advanced as much as 1.2% to US$7.6825 a bushel on CBOT, before trading at US$7.67. Wheat for July delivery gained 0.6% to US$8.1675 a bushel, while soy for delivery in the same month rose 0.2% to US$13.875 a bushel.

The eastern and southern Midwest and Delta regions may have "severe flooding" in the 10 days from yesterday, Telvent DTN Inc. said in a forecast yesterday. In Europe, rains forecast in the driest areas of western Germany, northern France, and England won't be enough to end crop concerns in the winter-wheat, corn, and rapeseed-growing areas, it said.

The rally in corn "is a continuation of concerns about the weather and the ability to get corn planted on time," Michael Pitts, a commodity sales director at National Australia Bank Ltd., said. "It's really about the US weather report and the European weather report."

About 9% of the corn crop was planted in the US as of April 24, compared with 46% at the same time last year, the Department of Agriculture said in an April 25 report.

About 85% of the crop needs to be planted by May 15, or farmers face higher risks that yields will fall below the historical average, Jay O'Neil, an adviser to the US Grains Council, said. The crop harvested last year in the US, the world's largest grower, represents about 39% of global production, according to USDA data.

Temperatures will drop below freezing twice next week in the upper Great Plains, where soil temperatures in some areas are below normal at prime planting time, said Allen Motew, a meteorologist with QT Information Systems in Chicago.

Corn won't germinate in soil below 50 degrees, according to Iowa State University's agronomy extension school. Ground temperatures are important because a late start to planting may affect how much can be harvested.

In northeastern Iowa, for example, corn needs to be planted from April 12-May 2 in order to reach a yield of 95-100 %, according to the university. Iowa is the largest US corn producer, accounting for about 15% of the acreage planted area last year.