Corn, soybeans soar on tight supply expectations

AP News
Posted: Mar 30, 2012 4:41 PM
Corn, soybeans soar on tight supply expectations

Corn and soybean prices soared Friday after two reports indicated that supplies could remain very tight into 2013, even as demand continues to strengthen.

Corn rose 6.6 percent, and soybeans ended up 3.5 percent. Wheat prices jumped almost 8 percent because of expectations that fewer acres will be planted this year.

The U.S. Agriculture Department said corn stockpiles totaled 6.01 billion bushels on March 1, which was 8 percent less than on March 1, 2011. It was a larger drop in inventories than many traders had expected.

The agency also estimated that farmers will plant 95.9 million acres of corn this year, a 4 percent increase from a year ago. But that did little to ease concerns about future supplies.

"This large acreage number is all fine and good, but that still has to come to fruition," said John Sanow, an analyst for Telvent DTN. On top of that, we still need to be able to grow the crop and it's not even in the ground yet, let alone in the bin."

The government estimated soybean inventories at 1.37 billion bushels, up 10 percent from a year ago. Farmers are expected to plant 73.9 million acres in soybeans this year, a decline of 1 percent from a year ago and below traders' expectations. Sanow said that could leave soybeans in very short supply by August 2013.

Corn and soybean inventories are already tight in the U.S. and around the world, and a drought damaged those crops in South America. At the same time, demand remains solid for both crops in the U.S., China and other countries.

The agriculture agency said wheat inventories totaled 1.2 billion bushels on March 1, down 16 percent from a year ago.

Farmers were forecast to plant 55.9 million acres, which was a 3 percent increase from 2011 but below traders' expectations. Much of the decline can be attributed to farmers in the Northern Plains opting to plant corn or soybeans instead of wheat, Sanow said. Global wheat stockpiles remain plentiful.

In May contracts, corn rose 40 cents to finish at $6.44 per bushel, soybeans increased 47.5 cents to $14.03 per bushel, and wheat ended up 48.25 cents at $6.6075 per bushel.

Other commodities were mixed after the Commerce Department said that consumer spending rose in February at the fastest rate in seven months.

Gold for April delivery rose $17.10 to finish at $1,669.30 an ounce, and May silver increased 49.2 cents to $32.484 an ounce. May copper rose 2.85 cents to end at $3.825 per pound, July platinum increased $15.80 to $1,644.10 per ounce, and June palladium ended up $9.55 at $654.10 per ounce.

Oil prices rose slightly after The Associated Press reported that President Barack Obama is moving ahead with tough sanctions aimed at squeezing Iran's oil exports. The AP reported that Obama took the step after determining there is enough crude on world markets to take that step without harming U.S. allies. It's the latest step in a dispute over Iran's nuclear program.

Benchmark crude increased 24 cents to finish at $103.02 per barrel on the New York Mercantile Exchange. Gasoline futures fell 3.16 cents to end at $3.3081 a gallon, heating oil rose 0.03 cent to $3.1701 per gallon and natural gas 2.3 cents to end at $2.126 per 1,000 cubic feet.