July 24, 2009

Corn prices in Asia may rise in coming sessions following an overnight rebound in Chicago Board of Trade futures, which climbed on reports that the U.S. Department of Agriculture will revise a planted acreage estimate in its August crop production report, while firmer crude oil prices also lent support, traders said Friday.

 

CBOT's September corn contract rallied Thursday following a recent steep decline to settle 19.00 cents higher at US$3.27 a bushel. Though the contract was slightly softer during Asian trade Friday - at 0700 GMT, e-CBOT's September corn contract was down 0.60 cent - traders in the region said the downside potential appears limited.

 

"I think US$3.25 should provide a decent support level from here, with a move up towards US$3.50 and even higher now possible," said a trader with a major Tokyo-based commodities house. "The USDA saying it will revise its acreage estimate in the August report is a bullish factor, while corn should also continue to receive spillover support from firmer crude oil prices. It's a difficult market to call, but the decline appears to have steadied, for now at least."

 

The USDA didn't say whether the revision would be up or downward, but most observers believe it will be reduced.

 

Gavin Maguire, a director at EHedger, said he expects an acreage cut, but noted this could be offset by higher yields. Benign weather for weeks, with forecasts calling for more cool weather, has weighed on prices and fueled expectations of a bumper crop. 

"Maybe we will lose a million acres, but we could see yields jump by 5, 6, 7 bushels per acre," Maguire said.

 

CBOT corn declined sharply after the USDA issued a large planted-acreage estimate in June.

China giving corn, soy sales another go

 

Meanwhile, China will sell more corn in northeastern major producing areas next week, according to an official statement on the China National Grain and Oils Information Center's Web site Friday.

 

The government will sell 2 million metric tonnes of corn, having sold 745,000 tonnes this week. China also plans to sell 500,000 tonnes of soy next week. China had planned to sell the same volume of soy this week but didn't sell any as the base price was higher than market prices, observers said.

 

Traders said the government may fail to meet its target again if it keeps the base price for the auction higher than those prevailing in the market. Observers said they expect base prices for the auction to remain at this week's level of RMB1,550 a tonne for corn and RMB3,750/tonne for soy.

 

In Japan, the Ministry of Agriculture, Forestry and Fisheries said late Thursday it had purchased 108,000 metric tonnes of U.S.- and Australia-orgin wheat in its weekly tender.