Corn Rises as Economic Growth May Boost Demand for Feed, Fuel

Corn rose for a second session on speculation that improving global growth will boost demand for food, animal feed and fuel made from the biggest U.S. crop.

Europe’s economy may gather strength next year after global governments spent billions of dollars on stimulus measures, the European Commission said today. China is targeting 8 percent growth in 2010, said Li Yizhong, the head of the Ministry of Industry and Information Technology. Potash Corp. of Saskatchewan Inc., the world’s biggest fertilizer producer, was added to Goldman Sachs Group Inc.’s “conviction-buy” list.

“People want to invest in food commodities,” said Mark Schultz, a vice president at Northstar Commodity Investments LLC in Minneapolis. “The markets are rising on new investment money.”

Corn for March delivery rose 2.25 cents, or 0.6 percent, to $4 a bushel on the Chicago Board of Trade, the second straight gain. The most-active contract fell 1.7 percent last week.

Prices also rose on speculation that rain, snow and wind will reduce U.S. production by damaging crops that are being harvested later than normal this year, Schultz said. About 92 percent of the crop was gathered as of Dec. 13, up from 88 percent a week earlier, the U.S. Department of Agriculture said last week.

The USDA on Dec. 10 forecast a 6.8 percent gain in output to 12.921 billion bushels and increased its stockpile estimate to 1.675 billion bushels.

Rain, snow and ice beginning Dec. 23 will threaten unharvested corn from Kansas to Ohio, said Mike Tannura, the president of T-Storm Weather in Chicago.

“There’s some crops that will be lost to the weather,” Schultz said. “There are quality problems” from the adverse weather this year, increasing the premium for higher-quality supplies, Schultz said.

Corn is the biggest U.S. crop, valued at $47.4 billion in 2008, government figures show.

Bloomberg