Corn, Soybeans Climb as Price Drop Slows Sales by U.S. Farmers

Corn jumped to a four-week high and soybeans rose for a fourth straight session after farmers curbed sales following a price slump earlier this year, tightening supplies for export and for producing animal feed and fuel.

Average U.S. prices for both crops sank 11 percent this year through Feb. 10, data from the Minneapolis Grain Exchange show. The declines gave growers less incentive to sell, leading to tighter supplies for shippers and processors. Snow and cold weather in much of the U.S. has also slowed transportation of supplies from grain silos.

“Farmers have quit selling until prices rally,” said Chad Henderson, a market analyst for Prime Agricultural Consultants Inc. in Brookfield, Wisconsin. “Corn will probably need to rally 15 cents and soybeans will need to rise 40 cents to entice farmers to sell more.”

Corn futures for May delivery rose 5.75 cents, or 1.5 percent, to $3.79 a bushel on the Chicago Board of Trade. Earlier, the pride touched $3.805, the highest level since Jan. 14. The most-active contract, which rolled from March to May on Feb. 10, climbed 6.2 percent last week.

Soybean futures for May delivery jumped 20.5 cents, or 2.1 percent, to $9.745 a bushel, the fourth straight gain. The May contract, which became the most-active futures on Feb. 10, rose 3.2 percent last week, snapping a five-week decline.

Prices also rose after crude-oil futures jumped as much as 4.2 percent in New York, increasing demand for alternative fuels made from crops, Henderson said.

Commodities Surge

The Reuters/Jefferies CRB Index of 19 commodities gained 2.6 percent, the most since Nov. 16, on speculation that Greek debt concerns will spur demand for alternative assets to hedge against inflation, Henderson said.

Hedge-fund managers and other large speculators held a net- short position of 4,563 contracts as of Feb. 9, the first cumulative bets that prices would fall since September, data from the Commodity Futures Trading Commission show. They held a net-long position of 185,538 contacts on Jan. 15, the largest bet on rising prices since June 2008.

In soybeans, large speculators increased their net-short position to 36,228 contracts in futures and options traded in Chicago in the week ended Feb. 9, the biggest bet on lower prices since October 2006, CFTC data show.

“The drop in the dollar and the rally in crude oil encouraged some buying” by speculators to close out short positions, Henderson said. “We were due for a rebound.”

The U.S. is the world’s biggest producer and exporter of corn, the country’s largest crop, and soybeans, the second- largest, according to government data.

By Jeff Wilson
Source: Bloomberg