Crop prices rise on bargain buying

AP News
Posted: Nov 15, 2011 4:02 PM
Crop prices rise on bargain buying

Crop futures closed higher Tuesday as livestock and ethanol producers take advantage of a recent decline in prices.

Corn for December delivery rose 12 cents, or nearly 2 percent, to settle at $6.455 per bushel Tuesday. December soybeans gained 22 cents, or nearly 2 percent, to $12.0025 a bushel. December wheat rose 17 cents, or nearly 3 percent, to finish at $6.3275 per bushel.

Crop prices fell sharply last week after the USDA predicted that corn surpluses in 2012 would not fall as sharply as expected. Turmoil in Europe and financial markets also pulled down prices on fears that the global economy would slow and reduce demand for food and crop-based fuels.

Livestock and ethanol producers rushed to get cheap supplies because expensive grain prices hurt their profit margins this summer. On September 2, corn cost $7.60 a bushel, close to the record high price of $7.99 it reached in June.

Corn was still trading as high as $6.61 a bushel in early November. But prices fell sharply after the USDA released its prediction. By Monday afternoon, corn had fallen 15 percent from early September.

When corn closed at $6.34 a bushel Monday, traders saw an opportunity, said Jason Ward, an analyst with Northstar Commodity in Minneapolis. Corn was so cheap that many livestock producers and ethanol makers could buy big quantities and use it more profitably.

"They're thinking that the prices are the cheapest they have been in five weeks: They'd better buy some," Ward said.

In other trading, metals were mostly higher. Gold for December delivery rose $3.80, or less than 1 percent, to settle at $1,782.20 per ounce. December silver gained 43.2 cents to close at $34.456 an ounce.

Copper for December delivery rose 1.35 cents, or less than 1 percent, to close at $3.5015 per pound. December palladium gained $2.75 to close at $667.05 an ounce. January platinum fell $1.40 to $1,642.70 an ounce.

In energy trading, Oil prices climbed to near $100 per barrel after a positive report about the U.S. economy stoked hopes that energy demand would rise. Retail sales rose in October for the fifth straight month, according the U.S. government.

Benchmark crude oil rose $1.23 to end at $99.37 per barrel on the New York Mercantile Exchange.

Heating oil gained 0.91 cents to finish at $3.1713 per gallon, gasoline futures rose 5.04 cents to close at $2.5857 per gallon and natural gas fell 5.8 cents to close at $3.542 per 1,000 cubic feet.


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