U.S. Corn Prices Soar To Record High As Crops Flood

Submitted by SadInAmerica on Wed, 06/11/2008 - 12:53pm.

U.S. corn futures soared over 4 percent to a fresh record high for the fifth consecutive trading session on Wednesday as flooding expanded in the U.S. Midwest, harming the 2008 corn crop.  (All by design folks... ~ SadInAmerica)

"There's still no indication that we're getting ready to change this pattern. Concerns continue from planting issues, to emergence to crop development," said Mike Palmerino, DTN Meteorlogix forecaster.

Corn prices have surged 80 percent in value over the past year with nearly 17 percent of that tacked on in the first week and a half in June.

Soybeans surged 3 percent and wheat leaped nearly 5 percent as those markets followed corn but the historic rainfall and flooding in the U.S. also were beginning to hurt soy and wheat crop prospects.

"There is definitely concern. There is way too much water and even if it is drier next week, it won't matter now, it's too late to plant corn and even bean yields are being affected," said Vic Lespinasse, analyst for grainanalyst.com.

Corn prices rallied the daily trading limit of 30 cents per bushel early in the session and the July new-crop contract soared to a record high of $7.56-1/4, above the previous record of $7.35 that was set in the Asian trade.

After nearly an hour of trading, U.S. corn for July delivery was up over 26 cents per bushel at nearly $7.00 per bushel.

The U.S. Department of Agriculture (USDA) this week slashed 5 bushels per acre from its estimate for U.S. corn yields per acre because of excessive rainfall and flooding in key corn states like top producers Illinois and Iowa.

Now, there are ideas that yields and corn acreage will fall further because it keeps raining.

This season comes the closest to the historic flood in the summer of 1993.

"That's the year everyone is looking at as a comparison," Palmerino said.

That summer the U.S. Midwest suffered from heavy flooding after weeks of rain which eventually caused the Mississippi River, a major North American river, to flood, washing out surrounding corn and soybean fields.

"The size of the corn crop is coming down and maybe the wheat crop too," said Chicago cash merchant Glenn Hollander of Hollander-Feuerhaken.

U.S. wheat markets leaped to keep up with corn and now the maturing winter wheat crop is being threatened by the rains.

After an hour of trade, U.S. wheat for July delivery (WN8) was up 39 cents per bushel at $8.48 per bushel.

Traders said the excessive wet weather in the U.S. crop region was the main driver of the markets but also tied some of the gains in grains and soy to a strong rebound in crude oil and gold as the dollar fell.

"More rain is exactly what we don't need and today we have the added support from crude oil being up," Lespinasse said.

U.S. soyoil, a key player in the biodiesel industry, soared following crude oil and soybean futures held to nearly 40 cents per bushel gains.

U.S. soy for July delivery was up over 41 cents per bushel at nearly $14.88 per bushel.

 Sam Nelson - June 11, 2008 - posted at http://biz.yahoo.com/rb/080611/markets_grains.html

(Reporting by Sam Nelson and Christine Stebbins; Editing by Marguerita Choy)

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Submitted by SadInAmerica on Wed, 06/11/2008 - 12:53pm.