US corn soars on wet weather, slow crop start

15 April 2008 22:27  [Source: ICIS news]

HOUSTON (ICIS news)--Lingering rains in the midwest and a slow start to the 2008 crop pushed US corn futures to record highs on Tuesday, reinforcing prospects that US ethanol margins will remain tight.

Prompt corn in Chicago ended Tuesday at $6.06/bushel, up from $5.91/bushel on Monday. Futures for July 2009 delivery hit an all-time high of $6.39/bushel, up from $6.28/bushel a day earlier.

Corn started the week on an upward trend after the US Department of Agriculture (USDA) reported on Monday that only 2% of the 2008 US corn crop had been planted as of 13 April.

That is down from the five-year average of 7%, according to the government.

USDA attributed this year's slow start to delays in spring planting preparation due to heavy rains in most of the midwest.

The rally in corn is adding pressure to the US ethanol industry, as the price of the corn-based biofuel has climbed - but not in the same magnitude of its feedstock.

Prompt ethanol in Chicago ended at $2.53/gal on Tuesday, up from $2.49/gal on Monday. US ethanol is produced at a yield of about 2.5 gal (9.5 litres) per bushel of corn.

Corn futures were below $4.00/bushel a year ago and were below $2.50 in early 2006.

For more on ethanol visit ICIS chemical intelligence

Bookmark Simon Robinson’s Big Biofuels Blog for some independent thinking on biofuels

By: William Lemos
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