Corn rises for seventh day as rain continues

Dee Asay-Resource Advisor 6-16-08

Futures up nearly 20% since June 3; soybeans touch three-month high on Thursday June 12, 2008.

Corn futures rose for a seventh straight day Thursday to a new record, as rain in the Midwest raised concerns that the grain’s production will be reduced. Futures have jumped nearly 20% since June 3, 2008

Soybean futures also rose to their highest level in more than three months, on concerns over the rain’s impact on those crops.

Corn futures for July delivery gained 19.75 cents, or 2.8%, to $7.23 a bushel in mid-afternoon trading on the Chicago Board of Trade. It rose to a new intraday record of $7.255 a bushel earlier. Corn is now 19% higher than the closing price on June 3.

AccuWeather.com forecast a new round of storms on Thursday across the Midwest. The storms will bring more rain to flood-ravaged Corn Belt states such as Iowa, Wisconsin and Indiana.

“There is no question that the rains in the last couple of weeks have taken a toll on the crop,” said Dale Mohler, senior meteorologist at AccuWeather. “The corn probably has been washed out of the fields or is simply under water and just rotting.”

Floods sweeping through the U.S. Midwest have destroyed thousands of acres of corn and soybeans at a time when corn prices have already rocketed to record highs on worries there won’t be enough grain to meet export, biofuel and feed needs.

Crops have not gotten this much moisture since 1993, which resulted in the smallest corn and soybean crops in 20 years, said DTN Meteorlogix forecaster Mike Palmerino.

“The only comparison you can make at this point is 1993 for the effects of the wet weather,” he said. “That is the only other year that crop yields were significantly affected by significant rainfall.”

In Iowa, the top U.S. soybean state, up to 10 percent of the crop may have to be replanted — and that’s on top of the 16 percent of the crop that has yet to get in the ground for the first time, said Palle Pedersen, of Iowa State University.

In 1993, rains began in early June and lasted well into harvest in September. This year, rains in April and May prevented many farmers from planting and recent storms will force them to replant at a late date that will reduce yields by as much as 50 percent.

So far the major difference between the rains of 2008 and 1993 has been the flooding that resulted as levees broke and the Mississippi River swelled over its banks.

The flooding in 1993 killed about 30 people and caused $15 billion in damage.

So far we don’t have the dollar amount of damages to roads, bridges, homes and crops appears likely to reach hundreds of millions of dollars because of record flooding in Iowa and major flooding across parts of Minnesota, Wisconsin, Illinois and Indiana, the NWS says. Flood damage calculations can’t be complete until waters go down and cleanup begins.

So with the flooding going on in the Midwest you can see how that has helped the Corn and Soybeans futures go higher on the news.

On Thursday, June 12, 2008 BMO Capital Markets and Citigroup downgraded shares of ethanol makers and corn refiners, ADM, CPO, BIOF, VSE these are the stocks that they downgraded. You can also look in the Farm products, Ethanol, Processed packaged good, railroad, and Specialty Chemicals sectors to an opportunity to find a good trade.

Food makers are likely to fell the supply squeeze, depending on how well they’ve hedged their grain needs for the rest of the year, so you might want to take a look at these stocks TSN, PPC, GIS, and K or you can look in the Processed packaged goods, and meat products to find an opportunity to find a good trade.

Now it is a wait and see what the total cost in damages that the Midwest floods for 2008 will be. It is really sad to watch the new and see the pictures of all the flooding and how many people are watching their homes be washed away by the floods and also the crops that the farmers have lost during the Midwest flooding.