November 15, 2010

CBOT corn gain on speculation China may sustain imports

Corn futures jumped in Chicago, after the biggest slump in six weeks lured importers and investors amid speculation that China will sustain purchases.

March-delivery corn rallied as much as 3% to US$5.645 a bushel on the CBOT after plunging 5.2% on November 12. The contract traded at US$5.575 at 12:18 p.m. Singapore time.

"It's a bit of a rebound from last Friday's prices. On a fundamentals basis, clearly the balances are still tightening and are likely to be tighter for longer. So that should be, all else being equal, supportive of prices," said Wayne Gordon, a senior analyst at Rabobank Groep NV.

According to Argentina's Ministry of Agriculture, Argentina is in talks with China on a so-called "sanitary protocol" that would allow it to export the grain to the Asian nation. The South American country expects to speed up discussions next year.

China halted corn imports from Argentina because of restrictions on genetically modified crops, the China National Grain and Oils Information Center said. About 80% of Argentina's corn crop is genetically modified.

The Asian nation may remain in the import market, even as production is forecast by the USDA to rise this year, as the country rebuilds its stockpiles that have dwindled after the government intervened in the market to cool food prices, Gordon said.

China's corn output was forecast by the USDA on November 9 to expand 6.3% from a year earlier to 168 million tonnes in the 2010-2011 season.

The nation's statistics bureau said November 11 that food prices in China advanced 10.1% in October, the biggest increase since August 2008.

Wheat for March delivery advanced as much as 1.7% to US$7.215 a bushel, after plunging 4.6% on November 12. The contract traded at US$7.11 a bushel at 12:03 p.m. Singapore time.

January-delivery soy gained as much as 1.3% to US$12.8575 a bushel after dropping 5.2% on November 12. The contract last traded little changed at US$12.6825.