Corn rose to the highest price in almost a month in Chicago, extending yesterday’s jump, on concern increased plantings in the U.S. will fail to rebuild global inventories.
U.S. stockpiles on March 1 dropped to 6.52 billion bushels, the lowest for the date since 2007, the Department of Agriculture said yesterday. Higher profits will spur farmers to sow corn on about 92.178 million acres, the second-largest area since 1944, at the same time that increasing food and biofuel demand cuts world inventories, the USDA said.
“Corn is very much supported by cattle feed, but also by ethanol in the U.S.,” said Jonathan Bouchet, an analyst at OTCex Group in Geneva. “Corn is still a needed commodity. It has the consumption behind it.”
May-delivery corn gained 35 cents, or 5 percent, to $7.2825 a bushel at 11:13 a.m. London time on the Chicago Board of Trade. The grain touched $7.34, the highest level for the most-active contract since March 4. Corn is set for a 5.6 percent advance this week after climbing yesterday by the maximum allowed by the exchange.
Global food costs increased to a record in February, the United Nations has said. Higher food prices contributed to unrest in the Arab world this year, triggering the ouster of leaders in Tunisia and Egypt. The U.S. is the biggest exporter of corn, soybeans and wheat.
Even with the expansion in acreage, which may take the U.S. corn harvest to a record, the nation’s stocks-to-use ratio in the 2011-12 season will still be the second-lowest since 1995-96, Rabobank Agri Commodity Markets Research said in a report e-mailed today.
“While the increase in area could be seen as bearish, the figure was overshadowed by the shock in the grain stocks report,” Rabobank said. “The new crops are not expected to replenish inventories to any meaningful extent, keeping prices in the new season high.”
The U.S. is estimated to account for 39 percent of the global corn harvest in the 2010-11 season, according to a USDA estimate on March 10.
Soybeans for May delivery fell 6.5 cents, or 0.5 percent, to $14.0375 a bushel after advancing 2.8 percent yesterday. The oilseed is set for a 3.3 percent advance this week.
U.S. farmers will cut soybean acres by 1 percent to 76.609 million, the USDA said, near analysts’ expectations. The nation is estimated to represent 35 percent of the global soybean harvest in the current season, USDA data last month showed. Inventories as of March 1 dropped 1.7 percent from a year earlier to 1.249 billion bushels, the USDA said.
Wheat for May delivery declined 3.75 cents, or 0.5 percent, to $7.595 a bushel after surging 5 percent yesterday. The grain is set for a 3.6 percent gain this week.
Total wheat acres in the U.S. may expand 8.2 percent from last year to 58.021 million, compared with analysts’ expectations of 57.239 million. About 14.427 million acres will be planted with spring wheat, up 5.3 percent from last year, the USDA said.
Milling wheat for May delivery added 2 euros, or 0.8 percent, to 242 euros ($342.57) a metric ton on NYSE Liffe in Paris.