November 30, 2010

CBOT corn rises as demand for US exports rise

CBOT corn rose on speculation that reduced global grain production will boost demand for supplies from the US, the biggest exporter.

Russia's agricultural regulator, Rosselkhoznadzor, said last week that the country is seeking to buy 300,000 tonnes of corn from Argentina. Prime Minister Vladimir Putin, said yesterday (Nov 29) that he has contacted other nations to reserve supplies after Russia's worst drought lessened production. US exporters sold 120,000 tonnes to Mexico, according to the USDA.

"Talk of Russia seeking Argentina corn will offer support," said an analyst. "We will need to confirm Argentina sales to Russia to sustain rallies."

Corn futures for March delivery rose US$0.00025 to close at US$5.5325 a bushel on CBOT. The price has increased by 48% since end-June, reaching a 26-month high of US$6.175 on November 9 because unfavourable weather reduced the size of the US crop.

Combined global production of feed grains including corn, sorghum, and barley will fall 2.1% to 1.085 billion tonnes in the marketing year that began on October 1, reducing reserve inventories before next year's harvest by 20%, the USDA said.

Argentina, the world's second-biggest corn shipper, will authorise the export of five million tonnes from the crop being planted now, starting February 15, the national agricultural exports agency said.

Russia may import 500,000 tonnes of feed barley from the EU before July, the Grain Producers' Union said. The country may also import two million tonnes of corn from Ukraine, an analyst said.

The country will have a shortfall of 2.5-3 million tonnes of feed by March or April and will probably need imports to narrow the gap, the analyst said. Russia may need to import as much as 5 million tonnes of grain in the year that ends June 30, he said.