GRAINS-Corn gains as crude soars, gold hits record

Trade the News

Sunday April 10, 2011 07:23:16 AM GMT

* Trade brushes off bearish USDA data

* Soaring crude oil lifts corn, soyoil and soybeans

* Weak dollar, soaring gold, inflation worry cited

* Coming up: U.S. spring planting season (Recasts, updates prices, market activity)

By Sam Nelson and Carey Gillam

KANSAS CITY/CHICAGO, April 8 (Reuters) - U.S. corn futures rose on Friday as crude oil leaped to its highest since 2008, gold soared to record highs and the dollar fell, feeding inflation worries and prompting broad-based buying of inflation-sensitive commodities.

Corn had sagged in early trade after U.S. agricultural officials left stocks data unchanged, disappointing traders who had expected a cut in already-thin corn inventories.

But corn reversed course and rose as crude oil surged to 2008 highs, coupled with a falling dollar which also boosted soybeans and wheat.

Corn has risen nine out of the past 10-weeks and was up 3.4 percent for this week alone. Wheat was up nearly 2 percent for the week while soy notched a 0.65 percent loss for the week.

Investors had a myriad of information to sort through.

The U.S. Department of Agriculture said it expected the U.S. corn supply at the end of the 2010/11 marketing year to total 675 million bushels, unchanged from its forecast in March and above an average of analysts' estimates for 586 million bushels. For details, see

"I don't think anyone believes the numbers and the corn market is going to trade 600 million bushels or less," said Paul Haugens, vice-president Newedge USA.

Chicago corn has risen more than 15 percent since March 31, when the release of a U.S. government report showing critically low corn stocks as of March 1 sparked a rally that catapulted corn prices to record levels on Tuesday and Thursday.

Soybean futures rose more than 1 percent and soyoil climbed more than 2 percent as crude oil rallied past $112 per barrel, the highest since 2008.

Expanding use of corn to make ethanol fuel and of vegoils such as soyoil to make biodiesel fuel led investors to purchase corn and soybeans as crude oil kept climbing on supply fears due to the conflict in Libya, Middle East unrest and concerns about Nigeria's postponed election process.

"All the talk shows are talking about massive inflation with crude oil going to $150 per barrel and you can't afford to ignore that," Haugens said.

At 10:34 a.m. CDT (1534 GMT), Chicago Board of Trade corn for May delivery was up 2 cents per bushel at $7.61, May soy was up 20 cents at $13.83-1/2 and May wheat was up 1/4 at $7.73-1/2.

Traders said corn retaind a bullish tone, given rising demand from China, Japan's problems following the earthquake there and higher gasoline prices tied to the Libyan crisis.

"Everybody was thinking the corn stocks were bearish but these are still tight stocks and if the market goes lower, I would buy it," said Glenn Hollander of Chicago cash merchant Hollander-Feuerhaken. (Reporting by Sam Nelson and Carey Gillam; Editing by David Gregorio)

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