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Corn prices hit by report on planting in US

By Robert Cookson

Published: June 30 2008 23:04 | Last updated: June 30 2008 23:04

Corn prices fell sharply after the US agriculture department revealed that US farmers had planted more of the crop than forecast, in spite of severe flooding in the Midwest.

The USDA acreage report also found that stocks of corn and wheat in the US were much higher than expected as surging prices curbed end-demand.

As a result, CBOT July corn fell 31 cents to $7.23¾ a bushel in late afternoon trade, although analysts said robust demand from the ethanol industry and export markets would keep an upward pressure on prices. Corn prices have jumped 59 per cent since January and set a record high last week of $7.65 a bushel.

CBOT July wheat lost 37½ cents to $8.56½ a bushel. However, CBOT July soyabeans rose 8¼ cents to $15.89½ a bushel, having previously in the session hit a record high of $16.04¾ a bushel as the USDA report revealed a small decline in harvested acres and confirmed that stocks were tight.

Analysts questioned how accurately the USDA survey reflected the flood damage: many still think that this year’s harvest will not live up to expectations, leaving the market exposed to a fresh surge in agricultural prices later in the summer.

Jim Bower, of Bower Trading, a commodities brokerage in Indiana, warned that the weather had been been mild and moist. “If we hit any hot, dry weather between about July 10 and August 15, we would have some serious problems,” he said, referring to the time when US crops start pollination, a crucial period for development that will influence the yield for this year’s harvest.

“This crop is the most shallow-rooted crop that I’ve seen in my 35 years in this business,” said Mr Bower.

Meanwhile, the US Department of Energy dealt a blow to the oil price in afternoon trade. It said US oil demand in April was 863,000 barrels per day less than previously estimated and down by 811,000 on the year.

That means petroleum consumption was at the lowest level for any April month in six years, suggesting high prices are starting to bite.

Nymex August West Texas Intermediate settled 21 cents lower at $140 a barrel, sharply down from a record of $143.67 a barrel set earlier in the session. ICE August Brent fell 48 cents to $139.83 a barrel, paring gains from a high of $143.91a barrel.

The records were set among geopolitical concerns. The commander of Iran’s Revolutionary Guards said at the weekend that Iran would respond to military attacks by imposing controls on shipping in the Gulf, which accounts for 40 per cent of the world’s traded oil flows. “The Iranian sabre-rattling, while sounding ominous, seems to be more bark than bite at this point,” said analysts at MF Global.

Natural gas hit a fresh 13-month high, with Nymex August natural gas up 11 cents to $13.31 per million British thermal units.

Gold fell back from a one-month high to $930 a troy ounce, down 0.6 per cent.

Base metals trading was quiet, with zinc down 0.5 per cent to $1,930 a tonne, lead 0.1 per cent lower at $1,780 a tonne and nickel up 1.4 per cent to $21,995.

Copper was higher in spite of news that miners in Peru, the world’s second-largest copper producer, had started a nationwide strike. London Metal Exchange copper for delivery in three months rose 0.1 per cent to $8550.