Demand for ethanol expected to hoist price of corn By Jeff Wilson
Published: September 4, 2006 CHICAGO Corn prices are expected to rise for a third week on speculation that increased demand for ethanol and livestock feed will cut U.S. inventories in half before the harvest next year.
Soybean prices could fall as crop prospects improve.
Fifteen of 24 farm advisers, grain merchants and traders surveyed by Bloomberg on Friday recommended buying corn, the most bullish forecast in two months. Corn rose 1.7 percent last week. Thirteen of 23 respondents advised selling soybeans, which dropped 1 percent, the eighth consecutive decline.
U.S. ethanol production in June jumped 8.9 percent from May to reach a record 13.4 million gallons, or 50.7 million liters, a day, according to the U.S. Energy Department. Corn export orders for the current marketing year, which began Friday, are up 70 percent from a year earlier at 8.57 million tons.
"The story is all about big buying from the importing nations," Dale Durchholz, a market analyst for AgriVisor Services in Bloomington, Illinois, said. "The best way to play the ethanol story is to buy corn because it is still cheap" relative to the value of the fuel.
Corn futures for delivery in December rose 4 cents to $2.4575 a bushel last week on the Chicago Board of Trade. Prices reached a two-year high of $2.845 on July 12 as hot, dry weather threatened supplies and ethanol demand increased. Corn has risen 5.2 percent from a four-month low of $2.335 on Aug. 15 on speculation that recent rains came too late to revive crops hurt by hot July weather.
Soybeans for November delivery fell 5.5 cents last week to $5.515 a bushel in Chicago, the lowest weekly closing price since Feb. 11. Futures are down 9.1 percent in the past year after farmers harvested one of the largest crops ever in 2005, raising reserve inventories to a record on June 1.
The corn rally last week and the drop in soybeans were anticipated by the majority of analysts surveyed Aug. 25.
The United States is the largest producer and exporter of corn and soybeans.
CHICAGO Corn prices are expected to rise for a third week on speculation that increased demand for ethanol and livestock feed will cut U.S. inventories in half before the harvest next year.
Soybean prices could fall as crop prospects improve.
Fifteen of 24 farm advisers, grain merchants and traders surveyed by Bloomberg on Friday recommended buying corn, the most bullish forecast in two months. Corn rose 1.7 percent last week. Thirteen of 23 respondents advised selling soybeans, which dropped 1 percent, the eighth consecutive decline.
U.S. ethanol production in June jumped 8.9 percent from May to reach a record 13.4 million gallons, or 50.7 million liters, a day, according to the U.S. Energy Department. Corn export orders for the current marketing year, which began Friday, are up 70 percent from a year earlier at 8.57 million tons.
"The story is all about big buying from the importing nations," Dale Durchholz, a market analyst for AgriVisor Services in Bloomington, Illinois, said. "The best way to play the ethanol story is to buy corn because it is still cheap" relative to the value of the fuel.
Corn futures for delivery in December rose 4 cents to $2.4575 a bushel last week on the Chicago Board of Trade. Prices reached a two-year high of $2.845 on July 12 as hot, dry weather threatened supplies and ethanol demand increased. Corn has risen 5.2 percent from a four-month low of $2.335 on Aug. 15 on speculation that recent rains came too late to revive crops hurt by hot July weather.
Soybeans for November delivery fell 5.5 cents last week to $5.515 a bushel in Chicago, the lowest weekly closing price since Feb. 11. Futures are down 9.1 percent in the past year after farmers harvested one of the largest crops ever in 2005, raising reserve inventories to a record on June 1.
The corn rally last week and the drop in soybeans were anticipated by the majority of analysts surveyed Aug. 25.
The United States is the largest producer and exporter of corn and soybeans.
CHICAGO Corn prices are expected to rise for a third week on speculation that increased demand for ethanol and livestock feed will cut U.S. inventories in half before the harvest next year.
Soybean prices could fall as crop prospects improve.
Fifteen of 24 farm advisers, grain merchants and traders surveyed by Bloomberg on Friday recommended buying corn, the most bullish forecast in two months. Corn rose 1.7 percent last week. Thirteen of 23 respondents advised selling soybeans, which dropped 1 percent, the eighth consecutive decline.
U.S. ethanol production in June jumped 8.9 percent from May to reach a record 13.4 million gallons, or 50.7 million liters, a day, according to the U.S. Energy Department. Corn export orders for the current marketing year, which began Friday, are up 70 percent from a year earlier at 8.57 million tons.
"The story is all about big buying from the importing nations," Dale Durchholz, a market analyst for AgriVisor Services in Bloomington, Illinois, said. "The best way to play the ethanol story is to buy corn because it is still cheap" relative to the value of the fuel.
Corn futures for delivery in December rose 4 cents to $2.4575 a bushel last week on the Chicago Board of Trade. Prices reached a two-year high of $2.845 on July 12 as hot, dry weather threatened supplies and ethanol demand increased. Corn has risen 5.2 percent from a four-month low of $2.335 on Aug. 15 on speculation that recent rains came too late to revive crops hurt by hot July weather.
Soybeans for November delivery fell 5.5 cents last week to $5.515 a bushel in Chicago, the lowest weekly closing price since Feb. 11. Futures are down 9.1 percent in the past year after farmers harvested one of the largest crops ever in 2005, raising reserve inventories to a record on June 1.
The corn rally last week and the drop in soybeans were anticipated by the majority of analysts surveyed Aug. 25.
The United States is the largest producer and exporter of corn and soybeans.
