April 6, 2011

CBOT corn climbs to all-time high for second consecutive day

CBOT corn settled at an all-time high for the second consecutive day on Tuesday (Apr 5) as demand remained strong in the face of limited stockpiles.

Corn for May delivery, the most-actively traded contract, closed up 0.9% at US$7.66 3/4 a bushel after reaching a record mid-day high of US$7.70 3/4 a bushel. The market set the new record a day after matching the previous mid-day high of US$7.65 a bushel, set in June 2008, on the CBOT. Wheat and soy ended weaker on CBOT.

Corn futures continued to climb, with no signs of slowed demand for the US crop ahead of next fall's harvest, analysts said. The government reported that private exporters had struck deals to sell 101,600 tonnes of corn to unknown destinations.

Futures have more than doubled since last summer on strong export demand, record US ethanol output, and steady buying by domestic livestock producers. Farmers have struggled to keep pace, even though the US crop last year was the third largest on record.

Fears about shrinking supplies have increased since the USDA had estimated on Thursday (Mar 31) that US corn inventories as of March 1 were down 15% from a year earlier, lower than what traders expected. The market has surged more than 15% since then and is eyeing US$8 a bushel as the next price target, analysts said.

Early gains in wheat futures added strength to corn, as both grains are used for livestock feed, traders said. Grain users and nervous livestock producers may gobble up more corn to feed their animals if a drought in the US Plains reduces the upcoming wheat harvest.

"If wheat inventory is low, it could easily lead to increased corn consumption," said Karl Setzer, analyst at MaxYield Cooperative in Iowa.

Yet, wheat futures pulled back at the CBOT following the early advances. Soft red winter wheat for May delivery closed down 0.5% at US$7.86 1/4 a bushel. Soy futures also were under pressure, with the May contract sliding 0.8% to US$13.73 1/4 a bushel.