U.S. Corn, Soybeans Rise as Freight Decline Boosts Global Sales
Corn rose the most in more than a
week and soybeans surged to a three-week high as declining
shipping costs boost overseas demand for supplies from the U.S.,
even after prices surged to records last month.
In the year starting Sept. 1, corn exports by the U.S., the
worlds largest producer, are up 33 percent from a year earlier,
compared with a U.S. Department of Agriculture forecast of 15
percent for the full 12 months. Soybean sales are up 0.8
percent, while the agency predicted an 11 percent decline in the
marketing period.
“You have very strong export demand driving prices, said
Shawn McCambridge, senior grain analyst for Prudential Financial
Inc. in Chicago. “Theres little evidence of a slowdown in
overseas demand.
Corn futures for March delivery rose 10 cents, or 2
percent, to $5.105 a bushel on the Chicago Board of Trade,
marking the biggest percentage gain since Jan. 24. The price,
up 27 percent in the past year, reached a record $5.1925 on Jan.
15 on record demand for the grain to produce ethanol and
livestock feed.
Soybean futures for March delivery jumped 38.75 cents, or
3 percent, to $13.26 a bushel. The price earlier reached $13.28,
the highest since climbing to a record $13.415 on Jan. 14. The
most-active contract has surged 80 percent in the past 12 months
after U.S. farmers planted the fewest acres in 12 years to seed
more corn.
The Baltic Dry Index of shipping costs for commodities has
dropped 40 percent in the past two months, reducing the cost of
U.S. supplies for importing nations.
Export Sales
U.S. exporters reported sales of 121,920 metric tons of
corn to Japan before Aug. 31, the USDA said today. U.S. corn
sold for export before Aug. 31 reached 46.3 million metric tons
on Jan. 24, the most ever for the date, government data showed.
Sales represent 74 percent of the USDAs export forecast,
compared with 57 percent on average for the date.
“The USDA may be understating U.S. corn export demand this
year, McCambridge said.
The average cash corn price last week rose 3.3 percent to
$4.705 and average cash soybeans climbed 4.5 percent on export
demand. The U.S. is the biggest producer and exporter of
soybeans.
Archer Daniels Midland Co., the worlds largest grain
processor, said farmers probably wont make a “dramatic shift
back to soybeans this year after corn plantings in 2007 surged
to the highest since 1944.
The change to soybeans will be focused outside of the main
growing areas of the Midwest, John Rice, an Archer Daniels
executive vice president, said today on a conference call with
analysts.
`Fringe Areas
“A lot of the acreage were seeing switched is really more
in the fringe areas, Rice said. “We see the Iowa, Illinois
and Ohio areas still going to plant a lot of corn.
Archer Daniels said second-quarter profit rose 7.3 percent
on grain trading and demand for soy meal and oil.
“Farmers may not plant enough soybeans this year to
match rising global demand for the oilseed, said Gregg Hunt, a
market analyst and broker for Fox Investments, a division of MF
Global Inc. in Chicago.
Corn and soybeans also gained on speculation rising energy
prices will boost demand for government-mandated and subsidized
alternative fuels made from crops. Crude-oil futures rose as
much as 2.1 percent today.
President George W. Bushs proposed budget for the next
fiscal year doesnt include any changes to an ethanol tariff
that is due to expire at the end of 2008. U.S. Energy Secretary
Samuel Bodman said last week that the budget for 2009 “will
start to deal with the ethanol tariff. Bushs $3.1 trillion
budget proposal was unveiled today.
Ethanol Tax
The U.S. has a 54-cent-a-gallon tax on imported ethanol.
Most U.S. ethanol is made using corn. Brazil has called for an
end to the tariff, which hinders its sales to the U.S. of
ethanol made from sugar cane.
“Rising crude oil is driving corn and soybean prices,
said Mark Schultz, a senior vice president at Northstar
Commodity Investments LLC. in Minneapolis. “We got a signal
from the federal government they will continue to spend money
on protecting the U.S. ethanol industry, he said.
Corn is the largest U.S. crop, valued at a record $33.8
billion in 2006, followed by soybeans at $19.7 billion,
government figures show.
