By K.T. Arasu
CHICAGO, Jan 11 (Reuters) - U.S. grains exploded on Friday, with bullish government data helping corn, soybeans and wheat soar and build on their impressive gains in 2007 while raising concerns over food price inflation that has been edging up.
The catalyst for the rally was a slew of reports from the U.S. Agriculture Department on crop production and stocks in the United States and across the globe -- keenly awaited data that had a few surprises in store for traders.
"What a report today," Rich Feltes, senior vice president of MF Global said. "Corn stocks tops the list of surprises. Corn could quite easily be limit-up today," he said on a CME Group-hosted panel discussion of the reports more than an hour before the Chicago Board of Trade opened for business.
Corn futures did open 20 cents per bushel higher, the most the market can move either way on a day, and ended that way.
Soybeans and wheat futures also rose by the daily trading limit of 50 cents and 30 cents a bushel, respectively.
"It's like a perfect storm," said analyst Dax Wedemeyer of U.S. Commodities, based in West Des Moines, Iowa.
He said high prices for corn, however, along with those for wheat and soybeans, could translate into further increases in the price of food products for consumers.
"For the buyer, obviously there will be economic concerns because before too long this will cause higher prices for food. We are already seeing this happen," he added.
MF Global's Feltes said the USDA needs to "choke off ethanol usage in the country," adding that the high price of corn, fueled in part by demand from the renewable fuel sector, was hurting livestock operations that depend on corn for feedstock.
He said the livestock sector was going "deeper into the red" because of the high cost of corn, which gained 14 percent in value last year and hit 11-year highs this year.
The U.S. Agriculture Department on Friday forecast U.S. surplus corn stockpiles at 1.438 billion bushels at the end of the 2007/08 marketing year on Aug. 31.
The tally is down from the USDA's December estimate of 1.797 billion and compared with trade estimates for 1.709 billion. The USDA pegged soybean ending stocks at 175 million bushels, down from December's 185 million and compared with trade estimates for 172 million.
The USDA forecast wheat ending stocks in the 2007/08 season that ends May 31 at 292 million bushels, up from its December estimate of 280 million bushels and compared with 271 million estimated by traders and analysts.
The USDA reported 2008 U.S. winter wheat seedings at 46.610 million acres, up 4 percent from 2007, but below the average trade estimate of 48.6 million.
Feltes said grain and oilseed markets are going to be very sensitive to developments in crop weather in South America, where Brazil and Argentina are key producers of soybeans, corn and wheat.
He said CBOT futures posted gains in Asian trading hours on Friday "just on a turn in the Argentine weather to a drier tone."
Dan Basse, president of research firm AgResource Company, told the panel that the reports would put pressure on the USDA to move land out of the Conservation Reserve Program, where farmers are paid to idle farm land for environmental reasons.
CBOT March corn rose the 20-cent limit to $4.95 a bushel, with the May crossing the $5 mark. March wheat rose 26-3/4 cents to $9.09-1/4 while May rose the 30-cent trading limit to $9.22-1/2.
March soybeans ended 42 cents higher at $12.86, while May ended 38-1/2 cents higher at $12.98-3/4 after rising the 50-cent limit. (Reporting by K.T. Arasu, editing by Matthew Lewis)
CHICAGO, Jan 11 (Reuters) - U.S. grains exploded on Friday, with bullish government data helping corn, soybeans and wheat soar and build on their impressive gains in 2007 while raising concerns over food price inflation that has been edging up.
The catalyst for the rally was a slew of reports from the U.S. Agriculture Department on crop production and stocks in the United States and across the globe -- keenly awaited data that had a few surprises in store for traders.
"What a report today," Rich Feltes, senior vice president of MF Global said. "Corn stocks tops the list of surprises. Corn could quite easily be limit-up today," he said on a CME Group-hosted panel discussion of the reports more than an hour before the Chicago Board of Trade opened for business.
Corn futures did open 20 cents per bushel higher, the most the market can move either way on a day, and ended that way.
Soybeans and wheat futures also rose by the daily trading limit of 50 cents and 30 cents a bushel, respectively.
"It's like a perfect storm," said analyst Dax Wedemeyer of U.S. Commodities, based in West Des Moines, Iowa.
He said high prices for corn, however, along with those for wheat and soybeans, could translate into further increases in the price of food products for consumers.
"For the buyer, obviously there will be economic concerns because before too long this will cause higher prices for food. We are already seeing this happen," he added.
MF Global's Feltes said the USDA needs to "choke off ethanol usage in the country," adding that the high price of corn, fueled in part by demand from the renewable fuel sector, was hurting livestock operations that depend on corn for feedstock.
He said the livestock sector was going "deeper into the red" because of the high cost of corn, which gained 14 percent in value last year and hit 11-year highs this year.
The U.S. Agriculture Department on Friday forecast U.S. surplus corn stockpiles at 1.438 billion bushels at the end of the 2007/08 marketing year on Aug. 31.
The tally is down from the USDA's December estimate of 1.797 billion and compared with trade estimates for 1.709 billion. The USDA pegged soybean ending stocks at 175 million bushels, down from December's 185 million and compared with trade estimates for 172 million.
The USDA forecast wheat ending stocks in the 2007/08 season that ends May 31 at 292 million bushels, up from its December estimate of 280 million bushels and compared with 271 million estimated by traders and analysts.
The USDA reported 2008 U.S. winter wheat seedings at 46.610 million acres, up 4 percent from 2007, but below the average trade estimate of 48.6 million.
Feltes said grain and oilseed markets are going to be very sensitive to developments in crop weather in South America, where Brazil and Argentina are key producers of soybeans, corn and wheat.
He said CBOT futures posted gains in Asian trading hours on Friday "just on a turn in the Argentine weather to a drier tone."
Dan Basse, president of research firm AgResource Company, told the panel that the reports would put pressure on the USDA to move land out of the Conservation Reserve Program, where farmers are paid to idle farm land for environmental reasons.
CBOT March corn rose the 20-cent limit to $4.95 a bushel, with the May crossing the $5 mark. March wheat rose 26-3/4 cents to $9.09-1/4 while May rose the 30-cent trading limit to $9.22-1/2.
March soybeans ended 42 cents higher at $12.86, while May ended 38-1/2 cents higher at $12.98-3/4 after rising the 50-cent limit. (Reporting by K.T. Arasu, editing by Matthew Lewis)
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