July 28, 2010

CBOT corn gains as price drop seen excessive

US corn futures climbed for the first time in five days as investors judged a decline to a three-week low excessive.

December-delivery corn rose as much as 0.5% to US$3.7875 a bushel in Chicago and traded at US$3.7875 at 1:56 p.m. in Tokyo. The most-active contract touched US$3.7575 on July 26, the lowest level since July 1, on speculation rain will improve crop yields in the US.

"It's only a technical correction," said Han Sung Min, a futures broker at Seoul-based Korea Exchange Bank Futures Co. Current favourable crop weather in the US may limit future price gains, he said.

About 72% of the corn crop was rated good or excellent as of July 25, while 67% of soy got the top ratings, the USDAsaid July 26. The ratings were unchanged from a week earlier.

Corn prices will average about 9% more in the first three months of 2011 than they have since July 1 because smaller crops in Europe, Russia and Ukraine will boost demand for US exports to Asia, Rabobank Group said in a report this week.

The price will average US$4.25 a bushel on the Chicago Board of Trade in the three months ending March 31, 2011, said Luke Chandler, Rabobank's executive director of agricultural market research. Corn also may rise because US supplies are cheaper for importers in China, Chandler said.