Corn futures rallied on Monday, matching the record-high price set during the 2008 global food crisis and extending sharp gains posted last week due to very tight supplies.
Futures added over 3 percent to a rally that began on Thursday when the U.S. Department of Agriculture pegged quarterly corn stocks as of March 1 at levels well below trade expectations. The tightening supply underscored the strong demand for the feed grain.
The market was also supported by the prospect of delays in spring plantings in the United States due to rains.
Corn prices have jumped over 14 percent since the rally started Thursday, and all signs point to even bigger gains.
"There are no signs saying corn won't go higher. Stocks were bullish for corn and now planting weather doesn't look good," said Mario Balletto, analyst for Citigroup.
Analysts said it could take years to replenish corn stocks, which USDA predicts will hit their lowest levels in 15 years this summer. The estimate will be updated in a government report on Friday.
The USDA last week pegged quarterly U.S. corn stocks as of March 1 at 6.523 billion bushels, below estimates for 6.690 billion and down 15 percent from a year ago. Strong demand from the livestock sector, ethanol distillers and importing nations have drawn supplies down, the government said.
The tight stocks estimate raises prospects that any production hiccups over the course of 2011 will make feed grain supplies critically tight over the next year, analysts said.
The USDA last week pegged U.S.corn plantings this spring at 92.2 million acres, above an average trade estimate for 91.839 million acres and the second-highest since 1944.
Some analysts were eyeing the potential for planting delays, however, amid forecasts for a cool, wet spring. Those worries only accelerated the rally.
WINTER WHEAT WORRIES
Wheat futures were also rallying as dry weather conditions in the U.S. Plains threatened production of the largest U.S. class of wheat. Extended drought conditions were limiting production potential of hard red winter wheat, particularly in western growing areas.
"Wheat has an issue with conditions," said Roy Huckabay, an analyst for The Linn Group. "I have some clients saying they might have to tear up their crop."
Soybean futures opened higher but gains faded rapidly. The market was pressured by favorable harvest weather in Argentina and in southern Brazil, and by talk that China may be shifting soybean orders from the U.S. to Brazil, traders said.
At 11:41 a.m. CDT, the most-active Chicago Board of Trade corn for May delivery was up 3.7 percent at $7.63 a bushel, after hitting a new high for the May contract and matching the all-time high of $7.65. Prices are at their highest levels since summer 2008 and are poised to set new records.
Chicago Board of Trade soft red winter wheat was up 2.5 percent at $7.78-3/4 after rising as high as $7.85-1/2 early. Kansas City Board of Trade hard red winter wheat futures led wheat gains, rallying 3.8 percent early.
Soybeans futures, meanwhile, were lower, with the May contract down 6-1/4, or 0.5 percent, at $13.87.
© 2013 Thomson/Reuters. All rights reserved.