Indiana Grain Company, LLC

Posted: 01/03/12

By: tomgrisafi

To end the final week of trading for 2011, corn traders were bullish for a fifth consecutive week on speculation that dry weather in South America is damaging crops.

If that's the case, demand for U.S. supplies of the golden grain could push corn higher than we've seen in recent months.

As Bloomberg reported Friday, 19 of 25 traders surveyed by Bloomberg expect corn to advance this week.

"Lower-than-average humidity and dry soil will curb crop development in Argentina and southern Brazil through at least Jan. 7, according to T-Storm Weather LLC, a forecaster in Chicago," the report reads.

At one point, corn fell 27 percent since the end of August 2011 as the U.S. forecast the biggest-ever global harvest. But in the last two weeks, corn surged 10 percent on mounting concern that South American weather will undermine that prediction and drive stockpiles lower.

“We have already caused irreversible damage to the corn crop,” said Dave Marshall, a farm marketing adviser at Toay Commodity Futures Group LLC in Nashville, Illinois. “The dry weather trend of the past five weeks probably already lowered production 5 to 7 million tons below the USDA forecasts.”

Source: Bloomberg

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