Corn jumps on weather worries

A 7-cent gain in corn prices overnight points to another week of volatile prices as nervous traders look to the unstable weather in the Corn Belt for signs that corn planting may be reduced.

Corn rose 7 cents per bushel to $6.90 in overnight trading on concerns that the weekly crop progress report this afternoon by the U.S. Department of Agriculture will show continued lags behind normal planting progress.

A week ago the USDA said 40 percent of the corn crop was planted, below the 60 percent norm for the last five yeras and just half of last year’s exceptional pace. Iowa’s crop was 69 percent planted a week ago, a spectacular jump over the previous week’s progress of just 8 percent.

But planting east of the Mississippi River was just 34 percent complete in Illinois and less than 5 percent finisihed in Indiana and Ohio, states beset with continued bad weather last week.

Although farmers can plant well into late May, and even replant flood-damaged crops into early June, May 15 is considered the psychological deadline for planting a crop with top yields.

Because of 15-year lows in domestic grain stocks, even with an extra 80 million bushels added to surpluses by a USDA report last week, traders and end users say there is ano margin for error this year in bringing home a bumper crop to rebuild U.S. granaries.

Flooding in the Lower Mississippi River valley now is feared to take away acres from corn. Farmers have the option to switch to soybeans and their shorter growing season. Soybean prices, although pressured recently by reports of huge crops being harvested in Brazil and Argentina, have held up a profitable levels for U.S. farmers.

In the overnight markets soybeans are up 4 cents per bushel to $13.33.

The market also is waiting for another sign of possible purchases of corn by China. On Friday the corn market was lifted by a persistent rumor of a Chinese purchase. Such rumors have been a staple in the market for weeks and have kept corn prices at levels double what they brought a year ago.

While China has purchased up to 60 percent of U.S. soybean exports, it has made only token purchases of U.S. corn during the last decade. A big Chinese purchase would counter the USDA prediction last week of declines in U.S. corn exports of 50 million bushels this year and 100 million bushels in 2012 due to falling demand caused by higher U.S. prices.

China is known to have bought considerable quantities of Australia’s rain-damaged wheat crop to use as animal feed, but it is thought China still will need more feed grain supplies.

(Source: http://blogs.desmoinesregister.com/dmr/index.php/2011/05/16/corn-jumps-on-weather-worries/)