Corn and Soybean Prices Soar On Demand, Weather Report
By Aaron LucchettiStaff Reporter of The Wall Street Journal
Strong export demand for U.S. corn and projections for a smaller 1997 crop pushed grain prices sharply higher.
In trading on the Chicago Board of Trade, prices of corn, soybean and wheat futures rose. Corn for December delivery closed at $2.7775 a bushel, up 11.75 cents, after hitting the daily 12-cent increase limit at $2.78 a bushel. The nearby September contract rose 10.75 cents to $2.73 a bushel, the highest closing price in more than two months. Meanwhile, December wheat rose seven cents to $3.845 a bushel, and November soybeans rose 14 cents to $6.24 a bushel.
Analysts and traders said the strengthened optimism in the grain markets stemmed from a surprisingly bullish report by the U.S. Department of Agriculture on export sales for the 1997 crop. Before the start of trading Thursday, the USDA reported that 773,900 tons of corn from the crop had been sold, mainly to Taiwan and Japan. Analysts had estimated sales of between 300,000 and 500,000 bushels.
"This is the best report we've had so far" for the current crop year, said Dale Gustafson, an analyst for Smith Barney in Chicago. Mr. Gustafson predicts that corn for December delivery will rise another 15 to 20 cents a bushel before the end of the month.
One of the major factors that Mr. Gustafson and other analysts are looking at closely is the Chinese corn crop, which is expected to be much smaller this year because of dry weather in key growing regions. Some analysts now say that country's crop could fall below 100 million metric tons, which would increase foreign countries' dependence on the U.S. corn crop.