From:


http://www.forbes.com/markets/currencies/newswire/2004/01/12/rtr1207802.html

COMMODITIES-Grains soar as supplies fall, oil firm
Reuters, 01.12.04, 5:27 PM ET


CHICAGO (Reuters) - Grain prices soared on Monday after the U.S.
Agriculture Department jolted the world market by shrinking its
estimates of last year's U.S. crops and its projections for 2004 world
grain stockpiles.

In other commodity markets, crude oil prices traded at the highest
level since the Iraq war. And a bounce in the weak U.S. dollar
prompted some profit taking in gold and copper, but silver bucked that
trend to reach a new 6-1/2 year high.

At the Chicago Board of Trade, prices for corn, wheat and soybeans
soared from the opening bell in reaction to surprising reports issued
by the USDA.

"Needless to say, about everything was a surprise, and it was a
bullish report," said Joe Victor, manager of marketing for Allendale
Inc. "The world stocks jump out at us, especially the 7-million-ton
reduction in world corn stocks."

USDA said there was not as much corn produced in the United States
during 2003 as it had previously estimated, while demand stayed
strong. This resulted in a cut in USDA's projection for world corn
stocks this year to 67.5 million metric tons, from 74.3 million
forecast in December and 130 million two years ago.

CBOT March corn closed 14-1/2 cents higher at $2.65-1/2 a bushel, the
highest close since September, 2002.

"The report tells me that if you look at stocks-to-use ... there
should be $2.75 on March corn," said Dale Gustafson, grain market
analyst for Citigroup.

"We continue to see tighter stocks worldwide and in the United
States," said Doane Agricultural Services President Dick Loewy. "World
corn stocks are the lowest in 25 years."

World wheat stocks were trimmed about 700,000 tons from last month at
127.66 million, compared with 201 million two years ago. But the USDA
shocked traders by also trimming estimated seedings of winter wheat
last fall by U.S. farmers.

USDA put winter wheat seedings at only 43.464 million acres, below the
average analyst estimate of 45.637 million.

"The noose continues to tighten and wheat prices certainly could move
back over $4.00 per bushel this year and we certainly have put the
lows in on corn," Loewy said.

CBOT March wheat closed 13-3/4 cents a bushel higher at $3.99-1/4,
hovering just below 14-month highs.