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Corn futures blast off

04/29/2013 @ 1:51pm

U.S. corn futures are up nearly 6%, their biggest percentage gain in seven months, amid fears that cold, wet weather in the Midwest will delay farmers planting a new crop.

Corn prices hit a one-month high as weather forecasts Monday projected rainfall in coming days in major corn-growing states such as Iowa and Illinois.

Late planting can cause price rallies in corn prices because it reduces the expected output of the nation's crop by leaving the plants more vulnerable to damage from summer heat during corn's main growth stage. Delays also could lead some farmers to decide to plant soybeans instead of corn, reducing the amount of corn harvested in the fall and leading to tighter supplies.

May corn futures, the front-month contract, recently were up 36 cents, or 5.6%, at $6.80 a bushel, the biggest percentage jump since September.

Corn futures received an extra lift Monday from speculative market participants scrambling to buy futures and exit soured bets that prices would fall, analysts said. Managed funds cut their bullish bets and increased their bearish bets on U.S. corn futures and options in the week through last Tuesday, regulatory data show.

"You caught all those people leaning the wrong way," said Jim Gerlach, president of A/C Trading Co., a Fowler, Ind., commodities brokerage. "You're definitely getting a knee-jerk reaction based off that."

Corn prices rose and fell earlier in April as traders watched shifting weather forecasts to predict whether spring planting would be significantly delayed.

From Monday to Saturday, the National Weather Service forecasts substantial rainfall in key corn-growing states from Nebraska and Minnesota to Indiana. Up to 3.3 inches of precipitation are expected on part of the Iowa-Minnesota border.

The storm system appears likely to linger over the Midwest after bringing that rainfall, leading to more days of cool, cloudy weather heading into the weekend, said Mike Tannura, owner of private forecaster T-storm Weather LLC in Chicago.

"The risk right now is that there might not be as many acres planted," Mr. Tannura said.

He added that "there was more than likely minimal [planting] progress made over the weekend, at least from Illinois east through Ohio, just because it was cloudy and cool and wet."

A week ago, farmers had only planted 4% of the country's corn crop, well below the five-year average of 16% for that point in the year, according to the U.S. Department of Agriculture. Rain and cold temperatures hindered corn farmers, who typically plant the crop in April and May.

Analysts say little more progress was likely made in the last week. The USDA will update its estimate of planting progress on Monday afternoon in a weekly report. The government had forecast in March that U.S. farmers would plant the biggest corn crop since 1936.

Perry Albin, a corn farmer in Newman, Illinois, said he has yet to seed the 1,000 acres of corn that he plans to plant this year, even though last year he had finished planting by mid-April. "We would rather have planted the corn in the second half of April, but I don't think the delay is critical yet," he said. "We're just kind of biding our time."

The jump on Monday took corn futures up to their highest level since a plunge that began on March 28, when a government report estimated that domestic corn stockpiles were much greater than analysts had expected. While that report eased concerns about tight supplies, corn stockpiles are still historically tight after last year's historic drought battered crops and sharply reduced U.S. production.

Front-month corn futures are down 18% from the nominal record closing high of $8.3125 last August.

Write to Owen Fletcher at owen.fletcher@wsj.com
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(END) Dow Jones Newswires
April 29, 2013 14:21 ET (18:21 GMT)
DJ Corn Futures Surge Nearly 6% in Biggest Gain Since September->copyright

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