Corn rose to a new record price Friday, extending its rally to an eighth straight session as floods in the Midwest threatened production in the U.S., the world’s largest grower and exporter. Soybeans rose to a three-month high.
As much as 12 inches of rain dropped in the Midwest this week, and some fields had five times the normal moisture since the end of May, the National Weather Service said. U.S. corn stockpiles before the 2009 harvest will fall 53 percent to a 13-year low, and soybean supply as a percentage of use will drop to a record this year, the government predicts.
“Flooding is serious at a time when supplies are extremely tight,” said Mark Schultz, a vice president of Northstar Commodity Investments LLC in Minneapolis. “It is a very emotional market with the uncertainty about crop losses, and that means prices are going to be erratic.”
Corn futures for December delivery, after the next harvest, rose 25.5 cents, or 3.4 percent, to $7.65 a bushel on the Chicago Board of Trade. The price earlier reached $7.69, the highest ever for a most-active contract and the seventh straight record. The July contract, which had been the most-active until Friday, rose 3.2 percent, to $7.3175.
The December contract gained 13 percent this week. The most-active contract has jumped 89 percent in the past year on record demand for livestock feed and biofuels. Global inventories may shrink to a 24-year low, the U.S. Department of Agriculture has said.
Soybean futures for July delivery rose 23.5 cents, or 1.5 percent, to $15.60 a bushel in Chicago. The price rose 7 percent this week, the most in almost two years. The most-active contract has climbed 89 percent in the past year, reaching a record $15.865 on March 3 on demand for animal feed and cooking oil.
Some parts of Missouri, Illinois and Indiana may receive up to 3 inches of rain in the next two days with a second storm on Sunday expected to bring up to 3 inches more to parts of the Midwest, said Gail Martell, a meteorologist for Storm Exchange in Milwaukee.
As much as 25 percent of the corn and soybeans are at risk of yield losses from damaged fields that farmers won’t replant, reduced plant populations, weed competition and diseases, Martell said. Iowa rivers are cresting at historic levels.
“The concerns now are the rains moving into Illinois,” the second-biggest corn- and soybean-growing state, after Iowa, said Dan Cekander, a senior grain analyst for NewEdge USA LLC in Chicago. “There are some big problems across the Midwest that are reducing yields and acres.”
About 60 percent of the corn crop in the U.S. was in good or excellent condition as of Sunday, down from 77 percent a year earlier, the USDA said this week. An estimated 57 percent of the soybeans were in good or excellent condition, compared with 70 percent a year earlier.
Corn production will fall 10 percent, to 11.7 billion bushels from 13.1 billion a year earlier, the USDA said Tuesday. The reduction reflects “persistent heavy rainfall across the Corn Belt.”
Farmers will harvest 78.8 million acres, or 92 percent of the total expected to be planted, the USDA said Thursday. Farmers last year harvested about the same proportion of planted fields, compared with the 90 percent average during the previous 20 years.
Corn harvesting will fall to 74.4 million acres and yields will drop to 145 bushels an acre because of the flooding and losses from saturated soils, Schultz said. Production may fall to 10.8 billion bushels this year.
“The crop losses are really hitting home this week,” Schultz said. “Cash supplies are going to get very tight because farmers are not going to sell” until the production outlook improves.
Corn is the biggest U.S. crop, valued at a record $52.1 billion in 2007, followed by soybeans at $26.8 billion.
