Mon, May 12 2008
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Published May 06, 2008 03:53 pm - Profits for U.S. ethanol makers boosted Corn near record price: oil to blame Corn futures surged near a record high Tuesday after crude oil spiked above $122 a barrel and forecasts for more rain in the U.S. corn belt threatened to put farmers further behind in their planting schedule.
Oil's rally helped lift other commodities, with gold, silver, wheat and rice futures all trading higher. As crude oil climbs further into record territory, gas and alternative energy markets have also risen, boosting profits for U.S. ethanol makers who use corn as their basic feedstock. "You use 3 billion bushels of corn to make ethanol, and with the rally in the energy futures, your ethanol plants become more profitable," said Roy Huckabay, analyst and executive vice president for the Linn Group in Chicago. Corn for July delivery added 17 cents to $6.11 a bushel on the Chicago Board of Trade, after earlier rising as high as $6.22, just below the contract high of $6.2875. Also pushing up prices were forecasts for light rain in the western U.S. corn belt states of Iowa, South Dakota and Minnesota. Weeks of heavy rainfall have already left fields too soggy for heavy machinery, leaving only 27 percent of this year's corn crop planted so far — the slowest pace since 1995, the U.S. Department of Agriculture said in a report Monday. "The fields are still too wet. Everybody's is working is hard as possible to get their corn planted before more rain comes," said Jason Ward, analyst with Northstar Commodity in Minneapolis. Meanwhile, rice futures also rose Tuesday after a catastrophic cyclone wiped out vast swaths of Myanmar's rice-growing areas. Myanmar grows 11 million tons of rice per year and exports 400,000 tons, representing about 1.7 percent of world trade, according to USDA figures. 
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