Corn Rallies to Highest Since 2008 as Stockpiles Drop, Goldman Sees Record

Corn rose for a third day to the highest price since 2008 in Chicago on concern that a planned increase in sowing in the U.S. will fail to rebuild global inventories drained by stronger demand.

U.S. corn stockpiles on March 1 dropped to 6.52 billion bushels, the lowest level for that date since 2007, the Department of Agriculture said on March 31. Farmers in the country will expand corn sowing to 92.178 million acres this year, the second-largest area since 1944, it said, citing a survey. The U.S. is the world’s biggest corn exporter.

“Despite higher U.S. plantings, demand remains robust, inventories hover at dangerously low levels and weather remains a risk as ever,” said Sudakshina Unnikrishnan, an analyst at Barclays Capital in London.

Corn for May delivery climbed 12.5 cents, or 1.7 percent, to $7.485 a bushel at 1:14 p.m. London time on the Chicago Board of Trade. The grain reached $7.50, the highest level for a most- active contract since July 2008, when a global food crisis spurred riots worldwide. Corn touched an all-time high of $7.9925 on June 27, 2008.

“At first glance, the plantings report showed the typical acreage response to elevated price levels,” Unnikrishnan said. “The stocks report highlighted the strength of underlying fundamentals, which have kept inventories persistently low.”

Record Food Prices

Surging corn may help to extend a rally in food costs, which reached a record in February, according to a United Nations gauge. Prices gained as global demand was estimated by the USDA to beat output this season by 21.4 million metric tons, cutting stockpiles to 123.1 million tons, the lowest level in four years.

The USDA report is “still driving the markets,” Simon Clancy, manager for export brokerage at FCStone Australia Pty Ltd., said by phone from Sydney today, referring to shrinking U.S. and global corn stockpiles. “It’s not something that’s going to be resolved anytime soon.”

Goldman Sachs Group Inc. increased its three-month forecast for corn by 39 percent to $8.60 a bushel after the USDA figures last week. “Corn prices need to rise strongly in the near term to ration demand,” the bank said in a report on April 1.

Twenty-three of 29 traders and analysts surveyed by Bloomberg News from Tokyo to Chicago on April 1 said corn will gain this week. The U.S. harvest represents about 39 percent of global output in the 2010-2011 season, according to USDA data.

Soybeans for May delivery rose 3.75 cents, or 0.3 percent, to $13.975 a bushel. The oilseed has added 48 percent in the past year, partly on increased Chinese demand.

Wheat for May delivery gained 13.25 cents, or 1.7 percent, to $7.7275 a bushel. The grain has increased 65 percent over the past year. Milling wheat for May delivery traded on NYSE Liffe in Paris climbed 3 euros, or 1.3 percent, to 242.75 euros ($345.60) a ton.

To contact the reporters on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net; Tony C. Dreibus in London at tdreibus@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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