Corn futures prices jumped Friday on the Chicago Board of Trade after the government reported that heavy spring rains shrunk corn acreage to a greater extent than traders expected.
December delivery prices, which leaped 61/4 cents to $2.801/2 a bushel, should easily advance to $2.90 and could top $3 if summer growing conditions are less than ideal, according to grain analyst Sue Leighty of Prudential Securities Inc. in New York."Ultimately, I think the market has to curb strong demand, and to do that, prices will have to go up," she said.
Wheat and soybean futures retreated in response to other USDA data. On other commodity markets, precious metal and coffee futures fell sharply, helping drive the Commodity Research Bureau's index of 21 commodities down 1.63 point to 233.38.
Price moves were exaggerated in some markets by thin trading conditions. Many traders got an early start on the Independence Day weekend, leaving fewer to deflect big orders. U.S. commodity markets will be open Monday, but many traders won't return to work until Wednesday.
This year's planted corn acreage totaled 72 million acres, 9 percent below last year's 79.2 million, the Agriculture Department said in a report released before trading began. Analysts' estimates averaged 73.2 million acres.
Farmers had planned to plant 75.3 million acres of corn this year, according to a March USDA survey, but rain and flooding in the Midwest kept many from their fields until early this month.
Soybeans were planted on some of the intended corn acres, resulting in a 1 percent increase in soybean acreage to 63.1 million acres from 61.9 million last year, the USDA said.
Hot, dry weather in July would force corn prices higher, said Jack Scoville, grain analyst with The Linn Group in Chicago.
"We're going to wait and see whether we deserve to go to $3.25 a bushel," he said. "Personally, I don't think we necessarily will. The weather has been slowly but surely improving."
Corn for July delivery rose 33/4 cents to $2.72 a bushel; July soybeans sank 41/2 cents to $5.771/2 a bushel.
Wheat futures fell, despite the USDA's report of shrinking spring wheat acres, as traders took profits from this week's 24-cent rally.
The government said farmers planted 16.8 million acres of spring wheat, 8 percent less than last year's 18.3 million, due to excessive rain in the northern Plains during the planting period.
July wheat slipped 11/2 cents to $4.46 a bushel.
Silver futures were slammed to a three-month low on the New York Mercantile Exchange by investment fund selling.
Other precious metals also fell sharply in a move triggered by gold sales by dealers who sometimes represent European central banks.
There was no clear catalyst for central bank sales, but precious metal investment has been generally discouraged by stable interest rates and the lack of inflationary pressures in the United States and abroad, according to analyst James Steel of Refco Inc., a large futures trading company.
The resolution of the U.S.-Japan trade dispute over auto parts also may have played a part by removing a potential source of currency turmoil, said William O'Neill, senior futures strategist for Merrill Lynch Futures.
"The elimination of that uncertainty eliminated a key near-term prop for the precious metals and gold in particular," he said.
July silver plunged 26.4 cents to $5.014 a troy ounce, the lowest daily settlement for near-term deliveries since March 29; August gold fell $3.80 to $385.60 a troy ounce; July platinum sank $6.40 to $434 a troy ounce.