Tags: Corn | Prices | Farmers | Plant

Corn Prices Surge 6% as US Farmers Plant at Snail's Pace

Monday, 29 April 2013 06:14 PM EDT

U.S. corn futures surged 6 percent on Monday in the biggest one-day gain since last year's drought, as traders feared that one of the slowest starts to spring planting on record would curtail the crop.

The abrupt spike in prices, which have been languishing near their lowest levels since last June, lifted wheat and soybean prices around 3 percent as well. A drop in the U.S. dollar also aided gains, with traders banking on the Federal Reserve and the European central bank to continue efforts to stimulate growth.

After the close of trade, U.S. government data confirmed traders' worse fears about the pace of spring planting: only 5 percent of the crop was in the ground as on Sunday, matching 1984's record for lowest percentage planted for this time of year. Plantings last year were 53 percent done.

Many investors were betting on a return to beneficial growing conditions after the worst drought since 1934 reduced yields at harvest and pushed corn futures to a record last August.

"Sentiment has shifted from drought relief to the possibility of a major problem," said Ken Smithmier, analyst at the Hightower Report in Chicago.

The gains were likely amplified by speculative traders racing to cover bearish short positions, which last week reached their largest in three years. Traders estimated that investment funds bought 26,000 corn contracts during the session, the most this year.

Chicago Board of Trade corn futures for July delivery rose by their 40-cent daily limit to close at $6.59-3/4 per bushel, the highest level since March 28. December corn, which reflects the harvest of a new U.S. crop, ended up 35-1/2 cents at $5.59-1/2, a gain of 6.8 percent.

Corn futures sank to a 10-month low earlier this month after the U.S. Agriculture Department said farmers would plant the largest corn area since 1933.

But one of the coldest, wettest springs in recent years is raising the risk that corn will not be planted by the optimal date of May 15. Farmers have already been hesitant about selling any of their crops left over from last year and this season's spring planting delays kept them edgy.

"There's not going to be selling until they get some crop in the ground. That's why the front end is leading," said Rich Feltes, vice president of commodity research with RJ O'Brien, a major agricultural futures brokerage.

Drier and warmer weather early this week will allow U.S. farmers to plant corn, but another round of showers is expected beginning near midweek, said John Dee, agriculture meteorologist for Global Weather Monitoring.

"We'll start out in OK shape, then late Tuesday into Wednesday rains begin in the west and spread to the east by Thursday and Friday," Dee said.

CBOT July wheat futures finished 24 cents, or 3.5 percent, higher at $7.16-1/2 per bushel. CBOT July soybeans ended 27-3/4 cents, or 2 percent, higher at $14.08-3/4.

Wheat was underpinned by concerns that crop scouts on a tour this week will find freeze-damaged wheat fields in the top growing state of Kansas.

Crop scouts - agronomists, wheat buyers, millers and bakers - will survey wheat fields in Kansas in the annual Wheat Quality Council tour beginning on Tuesday.

The scouts are expected to find fields damaged by the one-two punch of drought and April frosts.

© 2024 Thomson/Reuters. All rights reserved.


Markets
U.S. corn futures surged 6 percent on Monday in the biggest one-day gain since last year's drought, as traders feared that one of the slowest starts to spring planting on record would curtail the crop.
Corn,Prices,Farmers,Plant
548
2013-14-29
Monday, 29 April 2013 06:14 PM
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