November 9, 2011

Crop prices advance ahead of USDA's report on supplies

Crop prices jumped ahead of USDA's report that is expected to show tighter corn supplies next year.

USDA is set to release its monthly survey of global grain and soy supplies. It's the first government report since farmers harvested their crop last month.

Traders believe that the US corn harvest will be smaller this year because of an unusually hot summer. Corn hit a record price of US$7.99 a bushel in June on fears of a shortage in 2012. Prices have fallen since then after farmers planted the second biggest corn crop since World War II.

Corn for December delivery rose US$0.73 on Tuesday (Nov 8) or 1% to settle at US$6.6 per bushel. December soy rose by US$0.33 to US$12.05 a bushel. December wheat gained US$0.18, or nearly 3% to finish at US$6.57 per bushel.

Last month, the USDA predicted that farmers will have about 866 million bushels of corn on hand at the end of 2012. That's enough to satisfy demand for about 23 days. Most traders think a 30 day supply of corn is a healthy surplus level.

Farmers harvested about 85% of their corn in October. Wednesday's (Nov 9) report will be the first that uses actual tallies of this dity in Minneyear's harvest, rather than relying on estimates, said Jason Ward, an analyst with Northstar Commoapolis. Most analysts expect the report will show that an unusually hot summer reduced corn yields from Kansas to Illinois.