CBOT corn and soy prices gain as for biofuel demand increases

Corn and soy prices in the Chicago Board of Trade gained as crude oil prices increased as much as 8.2 percent, signaling an increase in demand for grain-based fuel.

Corn futures for March delivery rose 5 cents, or 1.3 percent, to US$3.785 a bushel at 11:11 a.m. yesterday (Dec 15, 2008). Earlier, the price reached US$3.9325, the highest since November 5. Last week, corn soared by a record 21 percent.

Soy futures for March delivery rose 6.25 cents, or 0.7 percent, to US$8.625 a bushel. The price surged 9.3 percent last week. The most-active contract before today tumbled 48 percent from the all-time high of US$16.3675 on July 3.

US farmers will plant 4.2 percent fewer acres with corn in 2009 and increase the area seeded with soy by 7.3 percent on expectations of higher returns, UK publisher Informa Economics forecasted last week.

Greg Grow, a director of agribusiness at Archer Financial Services in Chicago commented that farmers have no incentive to sell below the cost of production.

Meanwhile, China the world's biggest oilseed buyer said it may double its December imports of US soy to 2.9 million tonnes from a year earlier.

Corn is the biggest US crop, valued at a record US$52.1 billion in 2007, followed by soy at US$26.8 billion, US government figures show.