Corn rose the most allowed by the Chicago Board of Trade as concerns mounted that food costs will climb after the latest U.S. government forecasts on supplies and acreage. Soybeans and wheat also jumped.

U.S. corn stockpiles at the beginning of March dropped to 6.52 billion bushels, the lowest for the date since 2007, the Department of Agriculture said today. Last month, the prices of corn, soybeans, wheat and rice climbed to the highest since 2008, when surging food costs spurred riots from Haiti to Egypt. Today, cattle rose to a record for a second straight day, and cotton gained.

"What's unique about 2011, unlike 2008, is that corn and soybeans are equally tight, cotton is tight, and wheat isn't comfortable either," said Hussein Allidina, the head of commodity research at Morgan Stanley in New York. "The takeaway is that prices are not high enough to ration demand."

Global food costs climbed to a record last month, a United Nations index showed. High food prices and corruption have spurred unrest in northern Africa and the Middle East this year, ousting leaders in Tunisia and Egypt. The U.S. is the leading exporter of corn, soybeans and wheat.

U.S. farm acreage currently set aside for conservation may have to be pulled into production if corn inventories become too tight to meet food needs, Frank Lucas, the House Agriculture Committee chairman, said today an interview in Washington. The Conservation Reserve Program will pay growers to idle 31.2 million acres of land this year, USDA data show.

David Fuller's view Global stockpiles for many essential foods remain perilously low due to last year's unfavourable weather conditions in a number of countries.

Today, I heard from our most reliable source on this subject, who is also a Fullermoney subscriber, that the supply situation is particularly bad for corn and soybeans. He has consistently been way ahead of the USDA on this story and maintains that without rationing the USA will run out of corn before the new crop becomes available.

This time last year, sowing conditions were ideal for corn, with warm weather and the right amount of moisture. Bumper yields were expected in the USA. However, Fullermoney was advised that night time temperatures were too warm last July, keeping sugars in the roots and preventing the kernels from filling out. This proved to be correct.

Today, I hear that weather in most of the USA's corn belt is too cold for sowing. Average forecasts are 45 degrees Fahrenheit and 55 or above is required for germination. Additionally, heavy rainfall is forecast for much of the region, making sowing more difficult. Consequently, a delayed start for this year's corn crop appears very likely. Although late crops can still produce good yields under favourable summer conditions, the risk of frost increases around harvest time. I was also told that China's corn crop faces unusually dry conditions again this year.


Corn (weekly & daily) was in the latter stages of its large Type-3 base (churning, time and size) at this time last year and the subsequent uptrend commenced as prospects for a bumper crop deteriorated. If we look at this month's activity on the daily chart above, we see a significant shakeout of speculative positions coinciding with the Middle East uprisings and Japan's earthquake and tsunami. However prices rebounded quickly and today's limit move provides an additional upward dynamic. We now have the prospect of a higher reaction low following a significant consolidation. A close beneath $6.50 would be required to offset current prospects for not only a test of the recent high but also a resumption of the overall upward trend.

Soybeans (weekly & daily) show similar potential, provided the low near $13.40 holds. Wheat (weekly & daily) is lagging but has bounced well from the October and November lows, so I assume sideways to higher trading provided prices do not fall back beneath $7. Rough rice (weekly & daily) saw the biggest setback from its February high but failed to maintain a break beneath the November low. Consequently, it may be pulled somewhat higher by corn and soybeans