October 15, 2010

US corn futures slip as doubt grows over demand

US corn futures fell Thursday (Oct 14) as concern grew over possible declines in demand if prices remain strong.

Corn for December delivery, the most-active contract, settled down 2 cents, or 0.4%, at US$5.67 1/4 a bushel at the CBOT. The contract had risen as high as US$5.79 3/4 a bushel in earlier trading before a posting decline.

Corn futures have been climbing since mid-July, topped off by a recent surge following a deep cut last week by the federal government in its estimates for the fall corn harvest. Futures started to pull back Wednesday, dropping for the first time in four trading days after reaching their highest level in more than two years.

Driving concerns about an ebb in demand was the possibility South Korea, a large corn importer, may cut back on grain purchases, analysts said. South Korea's largest feed miller bought corn for delivery in March but passed on a tender to import feed wheat, according trading executives.

Many analysts have projected front-month December corn will reach US$6 a bushel on supply worries and strong demand. Contracts for delivery further in the future reached that price, but the December contract topped out at US$5.88 a bushel Wednesday (Oct 13).

Corn sales for the week ended October 7 are expected to be large at 1.4-2 million tonnes. If USDA reports large sales and prices weaken, the market will struggle to extend the rally, analysts said.