Chicago agricultural products balloon on reduced crop supply prospect, weak dollar

Chicago corn, wheat and soybeans all surged to their limit-ups on Friday as U.S. cut its crop-supply forecasts and the dollar further slumped on worse-than- expected unemployment number.

The most active corn contract for December delivery hiked 30 cents, or 0.6 percent, to 5.2815 U.S. dollars per bushel. December wheat soared 60 cents, or 0.9 percent, to 7.1915 dollars per bushel. November soybean surged 70 cents, or 0.7 percent, to 1135 dollars per bushel.

The U.S. Department of Agriculture (USDA) on Friday published its Supply/Demand Report, which was considered the most bullish factor behind Friday's surge, as it cut the crop supply estimate both in U.S. and the world.

USDA estimated that the U.S. ending corn stocks as of Sept. 1 arrived at just 902 million bushels, in comparison with market expectations of 1.175 billion bushels and the number is at the lowest level since 1997. Meanwhile, U.S. farmers will harvest 12. 664 billion bushels of corn, lower than 13.16 billion bushels projected a month earlier.

Besides, the world corn ending stocks were revised down by about 3 million tonnes from last month to 132.36 million tonnes, as compared with 148.06 million tonnes in the prior year.

Traders said that the U.S. would not produce enough corn to meet demand from domestic livestock producers, ethanol makers and overseas buyers and as a result, it has to run up the price to slow demand and encourage farmers to plant more next year.

Aside from the reduced supply forecasts, the further weakness in U.S. dollar also helped to prop up the market, as it makes commodities cheaper for importers using other currencies.

U.S. dollar index further slipped 0.05 percent to 77.36 after the Labor Department said the total nonfarm payrolls declined by 95,000 in September. The dollar also sank 0.3 percent to a near 15- year low of 82.04 against yen.

A trader predicted that the corn price may "trade above 6 dollars per bushel within the next few weeks."

As for the wheat market, USDA said the U.S. production was projected at 2.224 billion bushels, falling 1.8 percent from estimate in September. Meanwhile, the ending stocks are estimated at 853 million bushels, in comparison with 902 million bushels in the prior month.

The global wheat stockpiles will total 174.66 million metric tons on May 31, representing a 1.8-percent drop from 177.79 million estimated last month.

According to USDA's report, the U.S. soybean production would total 3.408 billion bushels, compared with 3.483 billion bushels projected in September and 3.359 billion gathered in 2009.

Besides, the ending stocks for the 2010-2011 season are estimated at 265 million bushels, as compared with market expectations of 335-340 million and 350 million bushels predicted by the USDA in the prior month.

A trader noted that the USDA's reductions in supply were mostly in line with trade expectations so the buyers seem to be counting on continued strong gains in corn and inflationary expectations to assume higher trade ahead.
(Source:xinhua)