November 4, 2010

CBOT corn gains on falling US inventories

CBOT corn rose for the first time in three sessions on speculation that US inventories will fall after adverse weather reduced Midwest output.

The USDA will cut its US corn-crop estimate for a third straight month after flooding and hot, dry weather reduced yields. CBOT soy also gained on increasing demand from China.

Corn prices have jumped 10% since October 8, when the government reduced its outlook for a second time. Soy climbed 9% in that period as China's consumption rose. The USDA will update its forecast on November 9.

"People are anticipating a smaller US crop," an analyst said.

Corn futures for December delivery rose US$0.053, or 0.9%, to close at US$5.81 a bushel on CBOT. Prices surged 17% in October.

Soy climbed on signs that demand is increasing in China, the world's biggest consumer. As of October 21, US sales in the year that started September 1 are up 19% to 27.355 million tonnes from a year earlier, USDA data showed. China accounted for 61% of the total.

Soy futures for January delivery rose US$0.035 cents, or 0.3%, to close at US$12.375 a bushel on CBOT. On October 28, the price reached US$12.488, the highest level since September 2008.

Both commodities also gained on speculation that additional stimulus measures by the Federal Reserve will weaken the dollar and boost demand for raw materials. After the close of the CBOT markets, the Federal Reserve said that it would buy an additional US$600 billion in assets to boost growth.

The US is the world's biggest grower and exporter of both commodities. Corn is the biggest US crop, valued at US$48.6 billion in 2009, followed by soy at US$31.8 billion, according to government figures.