Corn Advances as Adverse Weather Threatens Crops; Soybean Futures Climb

Corn futures advanced as adverse weather continued to threaten crops around the world, tightening global supply. Soybeans also gained.

May-delivery corn climbed 0.5 percent to $7.1025 a bushel on the Chicago Board of Trade at 10:38 a.m. Singapore time. The price yesterday advanced to $7.21 a bushel, the highest level for the most-active contract since July 2008, before ending 1.5 percent lower.

The grain may surge to a record in the first half and be the best-performing agricultural commodity as increased government purchases help to “inflame” the market, Vijay Iyengar, managing director at Agrocorp International Pte., said in an interview in Singapore yesterday. Agrocorp joins Rabobank International and Blackstone Group LP’s Byron Wien in forecasting record corn price in 2011 as global stockpiles drop.

“As the global economy recovers with steady growth, the crop prices may remain at historically high levels for a number of years,” Ker Chung Yang, an analyst at Phillip Futures Pte., said in a report e-mailed today.

Climate change will continue to “cause massive disruptions” to the supply of grains, coffee and cotton, supporting prices, said Olam International Ltd., one of the world’s three biggest rice suppliers.

“The fact is that climate around the world is changing and that will cause massive disruptions to supply chains,” Sunny Verghese, Olam chief executive officer, said in a Bloomberg Television interview. “We’re friendly to wheat, corn and soybeans and bearish on rice.”

Mexico Corn

The corn harvest in Mexico, forecast to be this year’s third-largest importer of the grain, may be cut by as much as 12 percent after freezing weather in the north, a unit of the U.S. Department of Agriculture said yesterday.

A cold snap during the first week of February will likely reduce production this year by 1 million to 3 million metric tons, the unit said in a report on its website. Mexico’s Agriculture Ministry last month forecast white and yellow corn output to rise to 25.2 million tons in 2011.

Before the report on Mexico, the USDA forecast that global corn stockpiles will drop at the end of this season to a four- year low, while inventories of wheat will slump 10 percent from a year ago, as flooding and drought in some of the world’s biggest producers pushed harvests below demand. Soybeans will drop to a two-year low, according to the USDA.

Farmers in the U.S., the world’s largest producer of corn, may increase this year’s plantings of the grain by 4.3 percent to 92 million acres, the most since 2007, the USDA said in a separate report yesterday.

Soybean acreage in the U.S., also the world’s largest grower and exporter of the oilseed, will expand 0.8 percent to a record 78 million acres, while combined winter- and spring-wheat acreage will rise 6.3 percent to 57 million acres, the USDA said yesterday.

“We believe the rise in crop plantings may not solve our immediate food crisis,” Ker said.

Soybeans for May delivery increased 0.3 percent to $14.2025 a bushel on the Chicago Board of Trade, ending three days of losses. Wheat for May delivery lost 0.2 percent to $9.025 a bushel inChicago.

(Source: http://www.bloomberg.com/news/2011-02-15/corn-advances-as-adverse-weather-threatens-crops-soybean-futures-climb.html)