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Grain rally pushes

commodities index

to new highs

CHICAGO: Grain prices soared to new highs again Monday and oil prices also gained on worries about supplies, powering commodity indexes to new eight-year highs.

The Knight-Ridder Commodity Research Bureau index of 17 commodity futures closed 4.12 points higher at 261.74, just off the new eight-year high of 261.96 set during the day.

At the Chicago Board of Trade wheat futures closed up the 20-cent-per-bushel daily limit, corn prices set new record highs and soybeans seven-year highs. The markets were pushed higher by reports of crop damage or planting delays combined with exports.

May wheat closed 20 cents higher at $6.28 a bushel, with pit traders saying 7 million to 9 million bushels of wheat were bid with no offers available at the close.

"We have a production problem here and end users who still need to buy wheat," said FIMAT Futures trader Skip Searcy.

Wheat soared after a leading weather forecaster on Sunday said that parched Kansas and Oklahoma wheat fields probably can't be revived even if significant rains arrive soon.

"I never saw so many gone fields in all the tours I've taken," said Peter Leavitt, president of Weather Services Corp. Leavitt just completed a tour which covered fields from Oklahoma City to Scott City, Kan.

He said there were many abandoned fields and many being ploughed under to make room for other crops like sorghum.

"It's a major situation out there. Anyone who thinks disaster is going to be averted is wishful thinking," he said.

Drought conditions this winter in the Kansas, the leading wheat producing state, threaten to further reduce wheat stocks that are already at their lowest levels since 1948. That is bad news for hungry foreign buyers like Egypt and China.

Active exports and domestic demand for U.S. corn pushed corn futures to another record. May corn ended 12 cents a bushel at $4.70, up from the previous high of $4.66 on Friday.

"Corn is up on the exports and is following wheat -- everything is following wheat," said Vic Lespinasse of Dean Witter Reynolds.

Japan and South Korea have been buying corn despite the soaring prices. Also, the Agriculture Department on Friday reported slightly more cattle at feedlots in leading states than analysts had expected, underpinning corn demand.

Buoyed by those gains, soybean futures went along for the ride and set new seven year highs.

"It was mainly a lack of selling in beans and you can't blame them for not selling. Every time beans break a little, wheat and corn come roaring back and take everyone out of there," said Mark Cermak of O'Connor and Co.

May soybeans closed 13-3/4 cents a bushel higher at $8.13-1/2 a bushel after setting a new contract high at $8.24-3/4, the highest price since October 1988.

At the New York Mercantile Exchange oil futures ended mostly higher on inconclusive talks at the United Nations about allowing Iraqi oil exports underpinning prices. Gasoline stocks remain extremely low heading into summer.

"This remains a demand-driven market, with little change in the fundamentals despite last week's correction," Amoco chief economist Ted Eck said. "Winter is over, but U.S. refiners only have about a month to raise gasoline yields for the summer. The impact of any Iraqi oil is likely to be limited given current low inventories."

May crude oil closed up 12 cents at $24.07 a barrel and May gasoline up 2.70 cents at 70.19 cents a gallon. May heating oil ended down 0.66 cent a gallon at 55.06 cents.-Reuter