U.S. corn futures matched their all-time high Monday on increased concerns federal forecasters will slash their supply outlook this week.
Corn for May delivery soared to $7.65 a bushel at the Chicago Board of Trade, matching the all-time high reached in June 2008. The contract trimmed gains slightly and was recently up 24 1/4 cents, or 3.3 percnet, at $7.60 1/4 a bushel.
If corn maintains its gains, it could beat the record close of $7.5475 a bushel also set in June 2008.
Driving prices higher are worries about strong demand that has drained stockpiles. The U.S. Department of Agriculture on Friday will update its forecast for end-of-season inventories, known as ending stocks, and could make a significant cut after reporting last week that inventories as of March 1 were tighter than expected.
The lower-than-expected inventories indicate strong demand. “High prices have not yet begun to temper demand and that we find impressive,” said Dennis Gartman publisher of the Gartman Letter.
Amid the surging prices, traders and analysts agreed the USDA is likely to slash its season-end forecast Friday. Bryce Knorr, an analyst for Farm Futures, an agricultural publication, expects the USDA to trim 100 million to 150 million bushels off its forecast of ending stocks.
That would leave less than a four-day supply to meet demand for corn from domestic users, including livestock and ethanol producers, and from foreign buyers, Knorr said.
Country Hedging, a brokerage firm, said federal forecasters could drop the projection to less than 500 million bushels from last month’s estimate of 675 million, which was a 15-year low.
“The function of the market will be to ration demand for the balance of the year and buy acres into spring planting,” said Charles Soule, an analyst for Country Hedging.
Traders worry the fall harvest may not be enough to replenish inventories in the U.S., the world’s top corn grower and exporter, if poor weather disrupts planting this spring. Frequent episodes of rain, especially over southern and eastern areas of the Midwest, “will slow fieldwork and planting and could initiate some flooding,” according to Telvent DTN, a private forecaster.
