November 22, 2010

CBOT corn jumps, soy rally
 

Corn rallied from a seven-week low whereas soy increased due to the weakening of the dollar amid optimism that an agreement to save Ireland's banks will stop contagion from diffusing across European debt markets.

Corn for March delivery rose as much as 2.2% to US$5.47 a bushel on CBOT and traded at US$5.44 at 230 pm Tokyo time today, November 22. The contract earlier decreased as much as 1.3% to US$5.28, the least for a most-active contract since October 8.

"Grains and other commodities were reacting very sensitively to the dollar's move. The dollar's decline stoked bargain-hunting after prices fell last week due to concern over slowing Chinese demand," said an analyst.

Soy for January delivery rose as much as 1.7% to US$12.22 a bushel and last traded at US$12.18. The contract declined to US$11.90 a bushel earlier, the least since October 20.

The euro rose from US$1.3673to US$1.3765, in New York on November 19. The currency increased for a fourth day as EU finance ministers said the deal will cause a capital fund for Ireland's banks and may end up "restructuring" the financial industry.

The dollar also decreased before the Federal Reserve announces tomorrow minutes of this month's meeting, when policy makers agreed to purchase US$600 billion in Treasury securities. The dollar's drop led to US supplies being cheaper for importers holding other currencies.

Corn decreased by 2.4% in the previous week while soy plummeted by 5.3%, the most since October 1, as actions taken by China to impede its economy threaten to stop demand for imports.

China ordered its banks to put aside bigger reserves for the fifth time this year, draining cash from the financial system to restrict inflation. The Asian country is the largest consumer of soy and the second biggest user of corn after the US.

Wheat for March delivery increased by as much as 1.2% to US$6.92 a bushel in CBOT and last traded at US$6.91. The commodity decreased by 3.6% in the previous week.