Grain Prices Soar on Shortage Fears By Dow Jones Newswires |Dow Jones Newswires Archive |Published: January 11, 2008 1:17 PM
CHICAGO (Dow Jones) -- U.S. grain futures exploded Friday on surprising government crop data that renewed fears about tight supplies and re-ignited a battle for acreage among corn, soybeans and wheat, analysts said.
Chicago Board of Trade corn futures hit fresh 12-year highs on the U.S. Department of Agriculture's January crop reports, while most-active CBOT March soybeans climbed above $13.00 a bushel for the first time. U.S. wheat futures soared to daily, exchange-imposed limits at the open of trading.
The USDA pegged 2007-08 U.S. corn ending stocks and quarterly grain stocks well below trade estimates. Last year's corn crop also turned out smaller than expected, the USDA said.
Seedings of winter wheat, particularly hard red winter wheat traded at the Kansas City Board of Trade, were also lower-than-expected.
"USDA issued a very bullish stocks report today," said Bill Nelson, associate vice president of AG Edwards & Sons, in a market comment. "The lower corn stocks essentially demand a couple million more acres of 2008 corn plantings versus previous views."
Corn ending stocks for 2007-08 were pegged at 1.438 billion bushels, well below the 1.698-billion average estimate of analysts surveyed by Dow Jones Newswires ahead of the report. Quarterly corn stocks were pegged at 10.269 billion bushels, under the average analyst estimate of 10.550 billion.
The government estimated corn yield at 151.1 bushels per acre, almost 2 bushels below the 153.0 estimated in November and the average analyst estimate of 152.3. Production of 13.074 billion bushels is down 35 million bushels from the average analyst estimate of 13.109 and below the 13.168 billion estimated by the USDA in November. MORE ON STOCKS FROM SMARTMONEY.COM Investing Opportunities for 2008 Smart Phones and Smarter Screens Impress at CES Exec Shuffle Perks Up Starbucks
CBOT corn futures rallied the daily trading limit of 20 cents in several contracts on the data. Nearby March corn is locked 20 cents higher at $4.95 per bushel as of 11:58 a.m. EST (1658 GMT).
Grain traders also were "shocked" by lower-than-expected 2008 winter wheat seedings, analysts said. Traders had been expecting a strong increase in acreage as U.S. wheat futures in 2007 rallied to record highs.
The USDA put 2008-09 all winter wheat seedings at 46.610 million acres, well below the average analyst estimate of 48.657 million. Hard red winter wheat seedings were seen at 32.5 million, down from 32.94 million in 2007.
Deferred-month wheat futures at the CBOT, KCBT and Minneapolis Grain Exchange were stuck limit up, 30 cents higher, as traders scrambled to get their hands on contracts that represent the new crop. CBOT July wheat was up 30 cents at $8.06, and KCBT July wheat was up 30 cents at $8.48 1/2, as of 11:58 a.m. EST (1658 GMT).
"Wheat prices will need to continue to battle the other crops for acreage in 2008," Nelson said. "High new-crop prices are needed to encourage plantings either in the northern Plains or in other spring wheat producing areas of the world."
CBOT soybean futures, which recently set all-time highs on tight supplies and strong demand, soared higher out of the starting blocks in sympathy with corn and wheat, traders said. The crops will have to battle for acreage in the U.S. this spring, analysts said. At 11:58 a.m. EST (1658 GMT), March soybeans were up 36 1/4 cents at $12.96 1/2.
