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Corn prices soar to all-time highs

CHICAGO: Corn prices surged to new all-time highs on Monday on shrinking supplies, helping a closely watched commodity index to its highest level since 1989.

Higher oil prices contributed to the rise in the Knight Ridder index of commodity futures to a 7-1/2-year high of 257.25. The index ended up 2.24 at 256.96.

The Goldman Sachs Commodity Index, which is heavily weighted toward the energy sector, gained 2.31 to 215.70 and reached a five-year high of 217.37 during the session.

The rallies in commodity prices were in sharp contrast to the slide in stock and bond prices, and put gold buyers on the offensive. Gold is attractive when paper assets are weak, and during periods of inflation posed by rising raw materials prices.

The yield of the Goldman Sachs index so far this year has outpaced the Standard and Poor's index 16 percent to 4.5 percent, noted Steve Strongin of Goldman Sachs.

Grain markets continued to spring ahead, buoyed by dwindling stocks of grain and no signs of a demand slowdown despite rising prices.

May corn reached a record high of $4.37-3/4 per bushel at the Chicago Board of Trade, and closed 9.25 cents higher at $4.35-3/4.

"The market continues to advance on what appears to be mostly speculative buying meeting only pockets of resistance,"said Ben George of Merrill Lynch Futures.

The Agriculture Department's last report showed a projection for corn supplies at the end of August of 412 million bushels, about one-fourth of last year's stocks and only three weeks supply.

The corn market also is getting a bounce from the early stages of a weather market for the coming year. Some analysts are predicting dry weather this summer in the Midwest corn belt. Current sub-normal temperatures is spreading concern about whether spring planting will be delayed or will hurt the germination of seeds.

"The talk of cold weather delaying plantings isn't really believable yet, but everyone is a Chicken Little right now," said Steve Bruce of E.D. and F. Man International.

The bulk of the corn crop is sown from mid-April through early May.

May soyabeans surged to a new contract high, gaining 15.75 cents to $7.81-1/4 a bushel. Bad conditions in the plains are plaguing the wheat crop, and May wheat advanced 2.75 cents to $5.25-1/4.

In New York, tight supplies of oil products and lingering winter weather in the northeast boosted heating oil prices and gasoline.

"Tight supplies here and overseas are keeping the market well-supported," said Victor Yu of Refco.

May heating oil rose 0.62 cent to 60.19 cents a gallon, after earlier setting a new contract high of 62.30 cents at the New York Mercantile Exchange.

May gasoline jumped 1.10 cents to 69.86 cents a gallon, hitting a 4-1/2-year high for a spot contract of 70.80 cents. May crude oil gained 28 cents to $23.03 a barrel, after also setting a new contract high of $23.52.

United Nations talks with Iraq to negotiate a limited sale of Iraqi oil began after the market closed.

Gold rose above the closely watched $400 an ounce mark for the first time in nearly two weeks, buoyed by a tumble in the stock market and surging commodity prices.

June gold rose $3.10 to $400.70 an ounce at the Comex.

The stock market got its first chance to react to very strong March jobs data released Friday. The data fuelled expectations that interest rates would move higher.

The gold market's gains had been modest, however, until last-minute buying attributed to commodity funds.-REUTER