Corn futures soar on demand, planting worries
U.S. corn futures settled sharply higher Monday, fueled by tight supplies and fears about planting delays.
Front-month futures hit a six-week high as the market reversed Friday's decline following the U.S. government's monthly crop forecast.
Chicago Board of Trade corn for May delivery settled up 30 1/4 cents, or 4.4%, at $7.18 a bushel. Corn futures for July delivery, the most actively traded contract, finished up 19 1/4 cents, or 3%, at $6.55 1/2 a bushel. The December contract settled up 9 3/4 cents, or 1.8%, to $5.39 1/4.
The "front end" of the market, or contracts for near-term delivery, led prices higher, a signal of scant physical supplies following the severe drought last year in the U.S., which curbed corn output.
End users from processors to shippers have ramped up near-term demand amid fears of domestic supplies only tightening further, said Mike Zuzolo, president of Global Commodity Analytics and Consulting in Lafayette, Ind.
Basis levels--the gap between cash prices for physical supplies and futures--firmed up at many locations across the Corn Belt as end users from processors to exporters continued to push for supplies.
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Traders were also nervous that additional planting delays in the Midwest could result from heavy rains expected to move across the Midwest.
Private weather forecasters show a wetter outlook for the Midwest a week from now. Farmers still should get a window to plant a lot of corn this week as conditions are favorable, but those delayed into next week may face uncertainty.
"The general consensus of traders is we are going to lose some corn acres this year due to planting delays," said Shawn McCambridge, senior grains analyst with Jefferies Bache in Chicago. "Another shot of rain this week will only push plantings back later."
Farmers like to have their corn crops seeded by the middle of May, so crops will reach key reproductive stages of development before stressful heat emerges in the summer.
Futures also were lifted by traders covering bets placed Friday on prices declining following the U.S. Department of Agriculture's larger-than-expected supply estimates for next year. The uncertainty of plantings raised questions about next year's supply forecasts, a factor that rekindled speculative buying, Mr. McCambridge added.
Wheat futures settled higher in unison with corn, drawing added support from lingering concerns about spring plantings and winter-wheat crops in the Great Plains.
July wheat futures ended up 5 1/2 cents, or 0.8%, at $7.09 3/4 a bushel at the Chicago Board of Trade. Kansas City Board of Trade July wheat rose 7 3/4 cents, or 1%, to $7.66 1/2 a bushel. MGEX July wheat finished up 3 3/4 cents, or 0.5%, at $8.12 1/2 a bushel.
Soybean futures also ended higher, boosted by tight domestic stockpiles of the oilseed.
CBOT soybeans for July delivery, the most actively traded contract, finished up 20 1/4 cents, or 1.4% at $14.19 1/4. The November soybean contract settled up 4 1/4 cents, or 0.4%, to $12.09 3/4.
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(END) Dow Jones Newswires
May 13, 2013 14:58 ET (18:58 GMT)
DJ UPDATE:Corn Futures Soar on Tight Supplies, Planting Worries->copyright
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