Chicago corn futures hit two-month high as Chinese demand increases

Corn futures in Chicago Board of Trade touched a two-month high on Wednesday (May 12), benefiting from a report that China has bought US corn.

Reports that a Chinese company purchased 300,000 tonnes of US corn on Tuesday (May 11) have supported corn price to post strong gains during earlier trading. Corn price then moved lower under the pressure of a rallied dollar and lower crude oil.

Traders noted that farmers have accelerated selling in the cash market, while warmer and less wet conditions in major US corn growing areas by the end of the week have also added downward pressures on corn price and pared its gains.

Traders suggested that the strengthened dollar set the weak tone for wheat, and profit taking and selling by spreaders versus corn also weighed on wheat to give back the gains it made during the earlier session.

Traders pointed out that the warm weather across the US Plains and Midwest, which will last about 10 days from now, accounted for much of the weakness of soy, since US farmers would take advantage of the favourable weather to accelerate planting and increase the yield potential.