* Broker predicted $8 corn

* Bought options on the cheap

* He now says corn prices have peaked but will stay high

* Do not go short before the harvest, he says

By Sam Nelson

CHICAGO, Aug 16 (Reuters) - A commodities broker who correctly predicted in January that corn prices would soar past $8 per bushel this year said the bull market for corn is over for now after prices hit an all-time high of $8.49 per bushel on Aug. 10.

Chris Manns, co-owner of Chicago brokerage Traders Group Inc, said the market has entered a period of high volatility as the world's largest corn harvest kicks off in the coming weeks.

He said prices will likely hover around the $8 level with wild swings.

"We'll see 20-cent declines followed by 20- or 30-cent rallies. The bull market may be over but it's going to be a very nervous market," Manns said.

In a January Reuters poll of 12 analysts, Manns predicted that spot corn futures at the Chicago Board of Trade would hit $8.12 at the end of 2012.

The price surge, however, came much earlier than he expected as the worst drought in half a century devastated the corn and soybean crops in the world's top exporter of grains.

Manns was the only analyst polled who forecast the price above $8. None of the others foresaw prices at the $6 or $7 levels, nine of them were in the $5.25 to $5.90 per bushel range, and two were at $4 and $4.92.

The corn market had a bearish tone early in the year as one of the mildest winters on record led to a record-fast spring planting pace and set the stage for bumper crops. Then the weather turned dry and hot as the crops were developing and reduced their yield potential.

"Way back in October we felt that it was getting dry; it (weather) was very mild. That was followed by the mildest winter maybe on record and that tipped us off that this might be a very difficult year for farmers," Manns told Reuters.

Manns advised his clients to buy December corn call options at the strike price of $7 and $8 per bushel, paying a premium of a paltry 10 to 12 cents per contract. Not many investors were expecting prices to rally to those levels because farmers were going to plant the largest area to corn since 1937.

"We started buying the $8 December calls in January and February and paid about 10 to 12 cents premium. We also were buying $7 calls at around 20 cents. We and our clients did very well," Manns said. "One contract was worth $500 then (for $8 calls) and now its worth $3,150. We're out of the $7 calls and have only a handful of the others left."

Manns, who declined to say how much money he made on his bets, now thinks corn prices are past their peak. But he does not think prices are going to tumble.

"I certainly don't want to sell the market going into harvest thinking it will collapse like normal times. The advice for now is get coverage, get coverage, get coverage," he said.

Instead of buying net open positions in corn options like he recommended early this year, Manns is now adding to an options spread position.

"We're looking into March now and anytime there's a pullback we'll add to the $8 and $9 vertical call spread, buying the $8 calls, selling the $9s and also selling puts against it," he said.

"It is out-of-the-money but it's also kind of expensive," so waiting for downward corrections or pullbacks in the corn market is important, Manns said. (Reporting By Sam Nelson; editing by Jim Marshall)