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Rain Threatens American Corn Crops

Posted on: Thursday, 12 June 2008, 12:15 CDT

U.S corn futures rose more than 4 percent, marking another record high for the fifth consecutive trading session on Wednesday.

The new-crop July 2009 contract soared to a record $7.56-1/4, surpassing the record of $7.35 set in during Asian trading hours.

By midday, U.S. corn for July 2008 delivery was locked up the 30-cent limit at $7.03-1/4 per bushel.

Meanwhile, floods moved across the U.S. Midwest, damaging the corn crop for 2008.

"There's still no indication that we're getting ready to change this pattern. Concerns continue from planting issues to emergence to crop development," Mike Palmerino, forecaster for DTN Meteorlogix, said.

On the Chicago Board of Trade, corn prices shot up over 80 percent this year, with an increase of almost 17 percent in this month alone.

Additionally, soybean prices surged 3 percent, and wheat prices jumped almost 5 percent as historic rainfall and flooding in the U.S . damaged prospects.

"There is definitely concern. There is way too much water and, even if it is drier next week, it won't matter now. It's too late to plant corn and even bean yields are being affected," Vic Lespinasse, an analyst for GrainAnalyst.com, said.

As a result of flooding in key corn producing states, this week the U.S. Department of Agriculture removed 5 bushels per acre from its early season estimate of U.S. corn yields.

Now there are ideas that yields and corn acreage will fall further because it keeps raining.

Palmerino said experts continue to look at the historic flood season of 1993 as a reference point for this season, which is shaping up to be very similar. In the summer of 1993, the U.S. Midwest suffered from heavy flooding after weeks of rain that eventually caused the Mississippi River, a major North American river and grain shipping artery, to flood, washing out surrounding corn and soybean fields.

"That's the year everyone is looking at as a comparison," Palmerino said.

U.S. wheat markets leaped to keep up with corn and now the maturing winter wheat crop is being threatened by the rains.

"The size of the corn crop is coming down, and maybe the wheat crop too," said Chicago cash merchant Glenn Hollander of Hollander-Feuerhaken.

Wheat for July delivery was up 58 cents per bushel at $8.67 per bushel at midday, nearing its 60-cent trading limit.

"If you look at corn prices, wheat can only rise. We can't have wheat cheaper than corn," a European trader said.

Still, U.S. trading experts continue to look to the skies for answers as the excessive wet weather poses a damaging blow to the U.S. crop region.

"More rain is exactly what we don't need, and today we have the added support from crude oil being up," Lespinasse said.

U.S. soyoil, a key resource for the biodiesel industry, soared following crude oil, and soybean futures held to their own limit gains.

U.S. soy for July delivery was up its limit of 70 cents at $15.16-1/2 per bushel.

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Source: redOrbit Staff and Wire Reports

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