Midwest crop losses to keep floor under grains

By Christine Stebbins - Analysis

CHICAGO (Reuters) - U.S. corn and soybean prices look set to stay elevated at historically high levels until several wild cards about flood losses and crop maturity become clearer over the next two months, analysts said.

Corn prices soared to all-time highs above $8 a bushel a week ago -- more than double the 40-year average price range of $2 to $4 -- as fears that as many as 5 million acres of corn and beans were lost in the month-long Midwest floods in June.

Back-of-the-envelope calculations by Chicago Board of Trade traders pointed to as much as 700 million bushels of corn possibly being lost -- wiping out the projected carry-out stocks for September 2009, already the lowest "cushion" for users in 13 years.

But the corn market got a jolt on Monday, falling after the U.S. Agriculture Department's annual plantings estimates -- data that normally uses farmer surveys through early June, when almost all Midwest corn and soy acres are planted.

Analysts said USDA's data collection on seedings had big holes and its projections for harvested acreage also needed a critical eye. U.S. corn and soy seedings were already far behind normal before the floods due to a cold, rainy spring.

"We've got a market that is very nervous, monitoring the weather, and is not at all that confident about USDA's acreage numbers," said Rich Feltes, senior vice president and director of MF Global Research in Chicago.

In Monday's report, USDA raised its planted corn acreage forecast to 87.3 million acres this year -- up 1.3 million from its March intentions report.

U.S. soybean planted acreage was forecast at 74.5 million, compared with USDA's March estimate for 74.8 million.