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Grain prices soar, corn closes at all-time high

CHICAGO: Grain prices soared on Wedensday, with corn closing at a record high in a flurry of commodity fund buying driven by the tightest supplies in two decades.

A moisture-sapping heatwave in the Great Plains wheat region spurred the rally in wheat prices, while harvest-delaying rains in South America's soybean fields helped lift soybean prices. But dwindling stocks of corn are providing the market's main impetus.

"I don't feel the market has topped yet. It is a great, historic, demand-driven bull market and you don't stand in front of freight trains," Dave Armstrong of The Chicago Corporation said.

At the Chicago Board of Trade, May corn surged 10 cents to $4.24-1/4 a bushel, surpassing the record closing high of $4.19-1/4 set November 28, 1980.

"It's impossible to say (how high corn prices will go). From a technical basis, you're in uncharted land. All I can say is, the trend is your friend and the trend is clearly up," Charlie Sernatinger of E.D. and F. Man International said.

May wheat jumped 11 cents to $5.23 a bushel, and May soybeans added 8.75 cents to $7.64-3/4.

In other commodity markets, oil prices reversed course and turned lower, while other markets appeared to be dominated by position-squaring ahead of the three-day Easter weekend.

The Knight Ridder index of 17 commodities rose 1.07 to 253.45.

Corn prices sagged in early trading but only briefly as commodity funds jumped into the market and prices surged in fast trading.

Last week, the government issued reports that showed U.S. stocks of corn as of March 1 were lower than expected at 3.8 billion bushels, down one-third from a year ago. Analysts said that at current rates of domestic consumption and exports, stocks could easily run out before the next harvest.

"Last week's (Agriculture Department) reports confirmed there is not enough rationing taking place to stretch corn supplies until the new crop arrives," said Jeff Wilson of Brock and Associates.

Meanwhile, energy prices retreated from Tuesday's gasoline-led rally on profit-taking heading into the holiday weekend. Refinery problems in Louisiana and California and historically low supplies of gasoline continued in the background, however.

"The real story was heating oil getting crushed and the May-June crude spread correcting," said Victor Yu of Refco.

May heating oil fell 1.50 cents to 58.22 cents a gallon at the New York Mercantile Exchange, as the high cash prices in New York Harbour abated.

May crude oil declined 43 cents to $22.27 a barrel, with the premium paid for nearby delivery in May versus June narrowed to $1.67 from $1.85.

May gasoline, dragged down by the decline in crude and heating oil, sank 0.42 cent to 67.69 cents a gallon.-Reuter