July 26, 2010

Corn futures seen to rise if China purchases climb

Corn futures may gain amid speculation that China will increase purchases, cuttiing worldwide supplies.

The December-delivery contract traded at US$3.845 a bushel on the CBOT at 3:27 p.m. Singapore time.

China's imports may expand to 5.8 million tonnes next year from 1.7 million tonnes this year, and may surge to 15 million tonnes by 2015 as the Asian nation enters a "new era" of buying from overseas, said the US Grains Council.

"China buying is certainly something that's going to be supportive for global grain prices," said Luke Mathews, a commodity strategist at Commonwealth Bank of Australia. The natural market to supply China "is certainly the US. That's something that's supportive of US corn prices," said Mathews.

According to the July 9 forecast from USDA, the US was forecasted to account for 55% of the global corn trade, and 40% of the world's total output next year.

"China's imports were forecasted to soar because even with normal weather, the nation won't be able to produce enough grain to meet demand as incomes rise," the council said. The report appeared in the council's Global Update report, dated July 22.

As per USDA data, the Asian nation had been a net exporter of the grain in the 13 years through September 2009. Last year, it sold 172,000 tonnes, compared with purchases of 47,000 tonnes in 2009.

November-delivery soy were little changed at US$9.81 a bushel at 3:10 p.m. Singapore time after declining as much as 0.7% earlier.

China boosted US soy purchases in recent weeks after prices fell against South American oilseeds and shipping costs declined, a state-owned market forecaster said. China is the world's biggest soy buyer.

September-delivery wheat slipped 0.3% to US$5.945 a bushel after declining as much as 0.8% earlier. Futures jumped 24% this month through July 23.