Corn Futures Likely To Top 10-year high

Corn futures in Chicago likely to go up above a 10-year high and soybeans likely to extend a rally as demand increases for alternative fuels made from crops. Twenty of 26 traders, farm advisers and grain merchants surveyed December 29 by Bloomberg said to buy both commodities. Corn advanced 1.6 per cent last week, the third straight gain, and jumped a record 81 per cent in 2006. Soybeans climbed 3.4 per cent, ending the year up almost 14 per cent. Rising demand for alternative fuels is eroding supplies of crops normally used for animal feed or food processing. US production capacity for corn-based ethanol, already at a record, may double in the next two years, and the government said last month demand for biodiesel made from soybean oil may rise 17 per cent in 2007. The US is the largest producer and exporter of both crops. Corn futures for March delivery climbed 6.25 cents last week to $3.9025 a bushel on the Chicago Board of Trade, the ninth gain in the past 10 weeks. Prices reached a 10-year high of $3.935 in November after a Midwest drought reduced US production and demand for grain to make ethanol rose to a record. Corn's 57 per cent advance from September through December was the biggest for any four-month period since at least 1973. The March soybean contract up 23 cents to $6.9725 a bushel last week, the third consecutive weekly gain. Prices reached a 17-month high on December 29 and have jumped 28 per cent in the past three months, the most over a three-month period since October 2003. Most respondents surveyed December 22 correctly predicted corn and soybeans would rise last week. The corn survey has been accurate 55 per cent of the time since it began April 26, 2004. The soybean survey, which started six weeks later, has been correct 54 per cent of the time. US demand for corn used to make ethanol, a gasoline additive, will rise 34 per cent to a record 2.15 billion bushels in the marketing year that began September 1, the US Department of Agriculture said December 11.