Chicago corn futures hit a 5-week high on Friday, lifted by strong demand for ethanol and increasing concerns over tight supply. Both wheat and soybean also advanced.
The most active corn contract for March delivery added 9 cents, or 1.5 percent, to 5.965 dollars per bushel. March wheat futures climbed 7 cents, or 0.9 percent, at 7.5675 dollars a bushel. January soybean added 9.75 cents, or 0.8 percent, to 12.9875 dollars per bushel.
A trader attributed the strength in corn to the tax cut extension for refiners who blend the biofuel into gasoline. The recent surge in weekly ethanol production has fueled expectations that the USDA will upgrade its forecast for the demand of corn.
The corn futures has touched a 27 month high of 6.05 bushel early November amid mounting concerns over the tight supplies of corn worldwide. And the surging demand for fuel made from crops will lead to a further decrease in corn stockpiles.
The planting intentions are shifting 2011 acreage into soybeans and out of corn, which is the reverse of some earlier forecasts, according to a private agricultural forecaster. A trader mentioned that the forecast has offered a strong boost to corn prices by fueling fears of a potential decrease in global corn stocks.
Meanwhile, the private forecaster also cut its estimate for wheat acreage, which also helped push up wheat prices. Traders mentioned that the adverse weather in Australia and Argentina has been largely factored into the prices, but the substantial gains in the weekly U.S. wheat export sales continued to support the wheat prices.
