Corn extends gains as U.S. stockpiles shrink

(Reuters) – U.S. corn rose more than 1 percent on Monday, sustaining steep gains from the prior session when prices surged by the daily limit, after the U.S. government said stockpiles of the grain shrank to less than 1 billion bushels for the first time in eight years.

Wheat eased after similarly soaring on Friday on smaller than anticipated stocks as of Sept. 1, suggesting that strong demand and drought-hit crops will keep markets tight.

FUNDAMENTALS

Corn for December delivery on the Chicago Board of Trade climbed 1.3 percent to $7.65-3/4 a bushel by 0039 GMT, after earlier hitting a two-week top of $7.68-1/2.

Corn climbed by 40 cents, or 5.6 percent, to $7.56-1/4 on Friday after dipping to a three-month low of $7.05 before the U.S. government report. It was the steepest rally for a spot month contract since July 5.

The U.S. Department of Agriculture’s survey of farmers and warehouses showed 988 million bushels of corn on hand — 11 percent less than expected — on Sept. 1.

Commodity funds scooped up 28,000 contracts of Chicago Board of Trade corn futures on Friday for the biggest one-day purchase in three months, trade sources said.

CBOT December wheat slipped 0.4 percent to $8.98-1/2 a bushel after surging 5.5 percent in the prior session, its biggest gain since June 25.

The USDA report showed wheat stocks of 2.1 billion bushels, 7 percent smaller than traders expected. Soybean stocks were much larger than forecast.

MARKET NEWS

The euro fell to a three-week low in early Asian trading, after an independent audit of Spain’s banks failed to quell concerns about the country’s progress towards a bailout needed to shore up its public finances.

U.S. crude weakened to below $92 a barrel as increasing worries about the euro zone debt crisis and its impact on oil demand deterred investors, while a stronger dollar added to pressure on prices.