CBOT Corn Futures Surpass $6 First Time in Almost Three Weeks

For the first time in about three weeks, corn futures on the Chicago Board of Trade surged past the $6 mark, as the U.S. dollar weakens on stronger oil prices and geo-political concerns.

Nearby September corn on the CBOT increased by 22 1/2 cents to $5.97 3/4, and most-active December gained 22 1/2 cents to end at $6.17 1/2 a bushel.

One other factor in the price of corn futures is Midwest rain may not be enough to pull corn through to a strong harvest. It's also slightly possible that later maturity levels could make corn vulnerable to frost further on in the season.

Kernals now filling out may not be helped by the forecasted wet weather over the next 7-10 days in the midwest.

Corn exports also fell far below the projected 850,000 to 1.4 million tons looked for; only 691,500 metric tons sold the week ending August 14.

According to the U.S. Department of Agriculture, 196,600 metric tons were sold for 2007-08, while 494,900 tons were sold for 2008-09.

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Happy Corn Subsidy Pacific Ethanol: Company Gets Clobbered with High Corn Prices

Talk about a self-inflicted wound! In a second-quarter report for Pacific Ethanol Inc. (Nasdaq:PEIX), the company said it lost to common stockholders of $10.5 million, or 23 cents a share. That's almost double the 12 cents a share loss analysts were looking for.

Taking into account the increase in net sales of $198 million, which is a boost of 74percent, it makes it even worse. During the second quarter last year net sales were $113.8 million.

Of that revenue increase, 52 percent was connected to increased sales, and another 10percent to increasing prices, among other things.

Gallons sold for the quarter reached 66.8 million, up from the 43.9 million gallons sold during the same period in 2007. Ethanol prices averaged $2.55 a gallon, up 23 cents.

Corn prices surged by 67 percent in the second quarter over the prices in the same quarter last year.

For the six-month period ending June 30, net losses came in at $359.5 million, increasing by 69 percent. Last year losses were $213 million net. Sales volume during the six-month perod grew by 52 percent or 126 million gallons, up from the 82.8 million gallons last year. Average ethanol prices for the period came in at $2.43, an increase from the $2.29 last year. Corn prices during the same time were up 64 percent on average.

The corn subsidy effect on prices continues to haunt those in the food industry, even those like Pacific Ethanol who are trying to exploit the taxpayer funded fiasco.

Corn Futures Drop to Lowest Level in Four Months

For the fourth straight session corn futures fell, dropping as low as $5.26 earlier in the day, the lowest level in four months on the CBOT.

The major driver of the drop is the cooling weather, as pollination will increase in response to cooler weather conditions, increasing corn yields. This helps to address the opposite concerns that hot weather would cause corn prices to surge through an even lower pollination rate.

"A forecast for relatively cooler weather this week will be beneficial for" corn's pollination, said Elaine Kub, a grain analyst at commodities research firm DTN.

Even so, according to the U.S. Department of Agriculture, as of August 3, pollination of corn was down from the five-year average of 91 percent, with 83 percent pollinating at this time. The cooler weather will increase that percentage, and probably bring it closer in line with past performance.

Another factor is the strengthening U.S. dollar, which has brought downward pressure on commodities in general, including corn.