November 16, 2010

CBOT corn gains most in three weeks

Chicago corn futures increased the most in three weeks and soy futures recovered as demand rose from livestock producers, food manufacturers and fuel makers, after the price slumps which took place last week.

US exporters sold corn to South Korea and Egypt and soy to unknown destinations, the USDA said today. Argentina is involved in talks on resuming corn exports to China. On November 12, corn and soy decreased drastically; the most permitted by CBOT.

"Consumers are using the recent drop in prices as an opportunity to buy ahead," said an analyst. "Speculation that China may be in the market to import corn is supportive."

Corn futures for March delivery increased by US$0.21 or 3.8%, to approximately US$5.69 a bushel on November 16. This is the largest gain since October, 20. On November 12, the contract decreased by US$0.30 or 5.2%, indicating a 9.2% drop in six sessions.

On November 9, the most-active contract attained a 26-month high of US$6.175 after unfavourable weather decreased the amount of US crop.

Soy futures for January delivery increased by US$0.175 or 1.4%, to approximately US$12.865 a bushel. On November 12, the price decreased drastically by US$0.70 or 5.2%, after reaching US$13.485, the peak amount for a most-active contract since August 28, 2008.

The US is the biggest grower and exporter of both commodities globally, according to government figures.

Soy demand from US processors increased by 22% in October from September as farmers sales of newly harvest crops rose. Users including Bunge Ltd. and Archer Daniels Midland Co. crushed 151.8 million bushels, an increase from 124.9 million in the previous month, the National Oilseed Processors Association said.

Domestic use had a "strong performance," another analyst said. "Today's data supports our belief that the USDA's full- season crush forecast" of 1.665 billion bushels "remains understated" by about 35 million, he said.