US corn futures rise on higher China sales speculation

Corn futures in the US rose to a three-week high on speculation that China, the second-biggest producer and consumer, may import more to reduce domestic prices that reached a 20-month high last week.

China grain users are interested in importing corn, with US shipments priced about RMB200 a tonne (US$0.74 cents a bushel) cheaper than local supplies, according to reports. China sold 852,000 tonnes from stockpiles yesterday in two sets of auctions where prices averaged RMB1,730 and RMB1,864 per tonne

Corn futures for July delivery rose 5.25 cents, or 1.4%, to US$3.685 a bushel on the CBOT, after earlier touching US$3.7375, the highest price since March 22. The most-active contract has fallen 11% this year on forecasts for production to rise 13% in Brazil and Argentina, the biggest exporters after the US.

Meanwhile, China has been increasing purchases of DDGS, said Dan Cekander, Newedge USA's director of grain research in Chicago.

The Asian nation boosted purchases of DDGS to about 213,000 tonnes in the first two months of 2010, up from 1,250 tonnes in the same period last year, data from the USDA show. Last year, sales ballooned to a record of more than 542,000 tonnes from less than 9,000 a year earlier.

Corn also gained after Archer Daniels Midland Co. cancelled 40 contracts for delivery against CBOT futures, exchange data showed. Last week, Cargill Inc. cancelled 22 contracts for potential delivery. There were 2,653 contracts (13.265 million bushels) registered for possible delivery, the CBOT said.