U.S. Commodities: Corn, Soybeans, Wheat Rise on Supply Outlook
Corn and soybeans jumped to the highest prices since July 2008 and wheat rose after the government cut forecasts for U.S. inventories, signaling tighter food supply as demand increases and adverse weather hurts crops.
Production of corn in the U.S., the world’s largest grain exporter, dropped 4.9 percent last year and will leave supply before the 2011 harvest at the lowest in 15 years, the Department of Agriculture said today. The agency also cut its estimate of the soybean crop by 1.4 percent and said domestic wheat inventories will be 16 percent less than a year earlier.
In other markets, crude oil climbed to a 27-month high after U.S. inventories declined more than forecast and equities gained on signals that European officials are stepping up efforts to solve the debt crisis. Cattle and hogs also rose. The UBS Bloomberg Constant Maturity Commodity Index advanced 1.3 percent to 1,676.13, the highest since July 15, 2008.
“There’s no room for error anymore” on farms around the world, said Dan Basse, the president of AgResouce Co., a commodity consultant in Chicago. “With any weather issues, we’re going to make new all-time highs in corn and soybeans, and to a lesser degree, wheat futures.”
Corn futures for March delivery rose 24 cents, or 4 percent, to close at $6.31 a bushel on the Chicago Board of Trade, the biggest gain since Dec. 1. Earlier, the price jumped by the exchange limit of 30 cents to $6.37, the highest since July 18, 2008.
Soybean futures for March delivery soared 58 cents, or 4.3 percent, to $14.15 a bushel, the largest advance since Oct. 8. Earlier, the oilseed surged by the exchange limit of 70 cents to $14.27, the highest since July 21, 2008.
Wheat futures for March delivery jumped 11 cents, or 1.4 percent, to $7.705 a bushel, ending a four-session slide.
Oil futures for February delivery climbed 75 cents, or 0.8 percent, to $91.86 a barrel on the New York Mercantile Exchange, the highest settlement since Oct. 3, 2008. The price has climbed 14 percent in the past 12 months.
The Energy Department report showed that stockpiles fell 2.15 million barrels to 333.1 million last week, the lowest since February. Supplies were forecast to drop 1.4 million barrels, according to a Bloomberg News survey. The Standard & Poor’s 500 rose to the highest since August 2008 as European leaders consider aid for Portugal.
“It was a big drop in crude-oil stocks, but not out of bounds of expectations,” said Michael Lynch, the president of Strategic Energy & Economic Research in Winchester Massachusetts. “Portugal is likely to see a rescue package, and that’s cause for relief. The European financial crisis has been a major concern for the past year.”
Cattle futures jumped to a record and hogs climbed to an eight-month high on concern rising feed costs will prompt farmers to curb supplies.
Corn, the main ingredient in livestock feed, surged to a 29-month high today after the government slashed its forecast for U.S. inventories. Farmers may cull herds in a bid to limit rising costs, said Rich Nelson, the director of research at Allendale Inc. in McHenry, Illinois.
“The short-term reality is that everybody’s going to get squeezed,” said Altin Kalo, a commodity analyst at Steiner Consulting Group in Manchester, New Hampshire. “If we are going to have these significantly higher feed costs in the U.S., it’s going to push prices higher for proteins.”
Cattle futures for February delivery rose 1.75 cents, or 1.6 percent, to settle at $1.102 a pound on the Chicago Mercantile Exchange. Earlier, the price reached $1.105, the highest since the commodity began trading on Nov. 30, 1964.
Hog futures for April settlement gained 1.875 cents, or 2.2 percent, to 87.025 cents a pound. Earlier, the price reached 87.1 cents, the highest since May 4.
Commodities settled as follows:
Precious metals: February gold up $1.50 to $1,385.80 an ounce March silver up 4.6 cents to $29.545 an ounce April platinum up $30.80 to $1,801.10 an ounce March palladium up $23 to $806.75 an ounce
Livestock: April live cattle up 1.8 cents to $1.14575 a pound March feeder cattle up 0.75 cent to $1.2605 a pound April lean hogs up 1.875 cents to 87.025 cents a pound February pork bellies unchanged at $1.06 a pound
Grains: March soybeans up 58 cents to $14.15 a bushel March corn up 24 cents to $6.31 a bushel March wheat up 11 cents to $7.705 a bushel March oats up 12.5 cents to $3.945 a bushel
Food and Fiber: March coffee up 5.9 cents to $2.406 a pound March cocoa up $25 to $2,959 a metric ton March cotton up 0.72 cent to $1.4797 a pound March sugar down 0.73 cent to 32.02 cents a pound March orange juice down 1.15 cents to $1.778 a pound
Energy: February crude oil up 75 cents to $91.86 a barrel February natural gas up 5 cents to $4.531 per million British thermal units February heating oil up 0.98 cent to $2.6186 a gallon February gasoline down 1.53 cents to $2.4631 a gallon
Others: March copper up 6.25 cents to $4.4115 a pound March lumber up 10 cents to $302.90 per 1,000 board feet
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