U.S. Commodities: Grains, Soybeans Surge to Highest Since 2008

Corn, wheat and soybean futures jumped to the highest since 2008 after a U.S. government report showed smaller crops and rising demand are eroding global inventories as food prices surge.

The U.S. Department of Agriculture cut its forecasts for inventories held before this year’s harvests and said world supplies of the crops will slump 2.2 percent. Droughts in Russia, Ukraine and other parts of Europe and adverse weather in the U.S., Canada and Australia slashed output as the world economy rebounded from the most-severe recession in 70 years.

“There is not one crop you can point to that is without supply problems,” Steve Nicholson, a commodity procurement specialist at International Food Products Corp. in St. Louis, said before today’s USDA report. “Production is not keeping up with demand, exacerbating the global food crisis.”

In other markets, cotton prices surged to a record on mounting concern that global supplies will continue to trail soaring demand. Crude oil declined. The UBS Bloomberg Constant Maturity Commodity Index advanced 0.3 percent to 1,720.5.

Corn futures for March delivery rose 24.25 cents, or 3.6 percent, to $6.98 a bushel on the Chicago Board of Trade. Earlier, the price reached $7.0075, the highest for a most- active contract since July 2008.

Wheat futures for March delivery advanced 11.75 cents, or 1.3 percent, to $8.86 a bushel. Earlier, the price reached $8.9325, the highest since August 2008.

Soybean futures for March delivery rose 16.75 cents, or 1.2 percent, to $14.51 a bushel. Earlier, the oilseed reached $14.5575, the highest since July 2008.

Cotton

Cotton for March delivery gained 5.29 cents, or 3 percent, to $1.8058 a pound on ICE Futures U.S. in New York. Earlier, the price soared by the exchange limit of 7 cents to an all-time high of $1.8229.

The U.S. Department of Agriculture said today that global production will be 115.25 million bales in the year ending July 31, down 0.2 percent from a January forecast, while demand was estimated to be little changed. Output in Central Asia, will be 7.02 million, down 2.1 percent from last month’s projection.

“There is no slackening of demand,” said Spencer Patton, the chief investment officer at Steel Vine Investments LLC in Chicago. “Day after day, we see cotton moving toward the upper limit.”

In the past 12 months, the fiber has more than doubled, the biggest gain among 19 raw materials in the Thomson Reuters/Jefferies CRB Index.

Crude Oil

Crude oil declined after an Energy Department report showed that U.S. petroleum inventories rose for the fourth straight week and fuel inventories climbed.

The government said oil stockpiles climbed 1.9 million barrels to 345.1 million last week. Supplies were forecast to increase 2 million barrels, according to the median of 15 analyst projections in a Bloomberg News survey. Supplies of gasoline and distillate fuels, including diesel and heating oil, also increased.

“The market is trying to digest the big builds in today’s reports,” said Carl Larry, the president of Oil Outlooks & Opinions LLC in Houston.

Oil futures for March delivery slipped 23 cents, or 0.3 percent, to $86.71 a barrel on the New York Mercantile Exchange, the lowest settlement since Jan. 27.

Commodities settled as follows:

Precious metals: April gold up $1.40 to $1,365.50 an ounce March silver up 0.005 cent to $30.276 an ounce April platinum down $2.50 to $1,859.40 an ounce March palladium down $12 to $826.45 an ounce

Livestock: April live cattle up 0.025 cent to $1.11275 a pound March feeder cattle down 1.325 cents to $1.22925 a pound April lean hogs up unchanged at 91.25 cents a pound February pork bellies up 2 cents to $1.15 a pound

Grains: March soybeans up 16.75 cents to $14.51 a bushel March corn up 24.25 cents to $6.98 a bushel March wheat up 11.75 cents to $8.86 a bushel March oats up 5 cents to $4.245 a bushel

Food and Fiber: March coffee up 6 cents to $2.536 a pound May cocoa up $23 to $3,283 a metric ton March cotton up 5.29 cents to $1.8058 a pound March sugar up 0.34 cent to 31.5 cents a pound March orange juice down 3.2 cents to $1.6745 a pound

Energy: March crude oil down 23 cents to $86.71 a barrel March natural gas up 0.4 cent to $4.044 per million British thermal units March heating oil up 3.71 cents to $2.7689 a gallon March gasoline up 3.18 cents to $2.5260 a gallon

Others: March copper down 5 cents to $4.524 a pound May lumber up $7.30 to $324.50 per 1,000 board feet

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net; Whitney McFerron in Washington at wmcferron1@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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