US grains rose on Thursday amid active speculative buying ahead of an anxiously awaited government report on farm planting plans, and worries that rains forecast for next week could stall seeding the crop.
The US Agriculture Department's report on Friday, the first survey-based estimate this year, is expected to show that American farmers will plant the most corn in about 60 years. The report will also forecast the number of acres to be planted with soybeans and spring wheat.
The report has injected a huge dose of excitement into the market, with investors keen to know if the corn acreage will be sufficient to feed rapidly growing demand from the US ethanol industry. "It's potentially monumental," said Vic Lespinasse, a trading floor spokesman for brokerage A.G. Edwards at the Chicago Board of Trade, the world's largest grain exchange.
"It's an unprecedented shift in acreage," he said. Some observers expect US farmers to plant as many as 91 million acres of corn this spring after seeing corn prices soar to 10-year highs this winter. The average trade estimate was for 88 million acres, up 10 million from last year and the most since 1946 when farmers planted 88.9 million acres.
Investors ranging from pension funds to speculators have pumped billions of dollars into grain markets, betting that the ferocious appetite for corn to make clean-burning ethanol will propel prices for the grain. There are 114 ethanol plants in the United States, the world's largest energy consumer, according to the Renewable Fuels Association. Another 80 plants are under construction.
CBOT corn futures for delivery in May rose 6 cents, or 1.5 percent, to $3.94-1/2 a bushel. May soybeans were up 7-1/2 cents, or 1 percent, at $7.78-1/4 while May wheat rose 4-1/2 cents to $4.61. Corn prices came off recent highs as investors cashed out some profits on prices that had doubled over the past two years to above $4 a bushel early this year.
The surge of prices to 10-year highs also had cut some demand for corn from the poultry and livestock sectors. Friday's report could turn out big winners if data backs investors who had been bullish on corn. "The trade is positioned for corn prices to go a lot higher so tomorrow's report will bring instantaneous rewards or prolong the agony of waiting for maybe a year or more for prices to go higher," said Skip Searcy, a veteran trader of 24 years who works for brokerage Fimat USA.
"The report is important because there is so much money on the table betting on the ethanol story and that tomorrow's corn planting number will be the biggest acreage in 60 years," he said. The United States is the world's top grower and exporter of corn and soybeans, and the No 1 exporter of wheat.
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