London Commodity Markets | Corn Soars As USDA Reports Crop Devastation

U.S. corn and wheat stockpiles shrank far more this summer than grain markets thought, the government reported Friday, and corn prices soared on prospects that heavy demand and drought-decimated crops will keep markets tight.

London Commodity Markets Industry News

Corn futures were limit up — at the daily ceiling — at $7.56-1/2 a bushel in Chicago at midday. "Synthetic" bids indicated corn was worth $7.59 a bushel.

Corn futures surged nearly 6% and hit the daily limit on the Chicago Board of Trade after the U.S. Department of Agriculture reported corn stocks on Sept. 1 were below 1 billion bushels for the first time in eight years. The surge in corn prices pulled up wheat and soybean prices, too, analysts said.

The worst U.S. drought in half a century has decimated crops, and tight supplies should keep commodity prices at record levels and boost prices at the grocery store.

USDA's survey of farmers and warehouses showed 988 million bushels of corn on hand — 11% less than expected — on Sept. 1. That date is the start of the corn marketing year and the traditional low point for supplies, as it comes before this year's harvest gets added to the stockpiles.

It was the third straight year that the USDA's September inventory report surprised traders. Many analysts had expected stockpiles to rise because the corn harvest started early this fall.

But supplies shrank. Even with corn prices soaring earlier this year, demand remained heavy from exporters, livestock farmers, ethanol plants and food makers.

Source: news.investors.com

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