Corn rose for a fourth day, heading for the longest rally since October, on speculation that the worst drought since the 1930s sent U.S. inventories to a nine- year low. Soybeans dropped.
The government probably will say tomorrow that domestic corn reserves on Dec. 1 fell 15 percent from a year earlier, the biggest drop since 1995, according to a Bloomberg survey. Cash prices yesterday in Kansas City were almost double the 10-year average, while ethanol producers in Cedar Rapids, Iowa, were paying a premium of 28.4 cents a bushel over Chicago futures, compared with a 4.4-cent discount a year earlier.
“Gains were fueled by expectations for the federal government to trim its estimate for 2012 domestic corn production,” Jim Gerlach, the president of A/C Trading Co. in Fowler, Indiana, said in a report to clients. “Cash markets are firming” on increasing completion for supplies from U.S. livestock producers and ethanol plants, he said.
Corn futures for March delivery gained 0.4 percent to $6.9675 a bushel at 9:55 a.m. on the Chicago Board of Trade, heading for the first four-day rally since Oct. 19. Prices rallied as much as 68 percent since mid-June to a record $8.49 on Aug. 10 before retreating.
Soybean futures for March delivery slid 0.2 percent to $13.825 a bushel in Chicago. Through yesterday, the most-active contract fell 23 percent since reaching a record $17.89 on Sept. 4 as rains boosted crops in Brazil and Argentina, the two biggest producers after the U.S. last year.
Earlier, the contract gained 0.7 percent after the U.S. Department of Agriculture reported export sales of 120,000 metric tons to China for delivery in the 12 months starting Sept. 1 and 60,000 tons for delivery before Aug. 31. Exporters reported sales of 281,500 tons to unknown destinations for delivery by Aug. 31.
In the U.S., corn is the biggest crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show.
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