December 22, 2008
Corn prices may remain in a tight range next week as, on one hand, a weaker dollar helps U.S. growers boost shipments to Asia, lowering supplies, while sliding crude oil prices reduces demand for biofuels, weakening ethanol producers' corn consumption.
U.S. corn sales to Asia rose 38% to 504,000 metric tonnes last week compared with 365,000 tonnes in the preceding week.
A weaker dollar versus the yen is particularly beneficial for the U.S., the world's biggest producer of corn, given that 70% of its shipments come to markets in Asia, including Japan, said Tim Hannagan of U.S.-based commodities brokerage firm Alaron.
Japan is the world's biggest corn importer.
Still, corn prices aren't able to sustain gains as cheaper oil prices is discouraging car owners from using ethanol-blended fuels. A third of U.S. corn output is used as a feedstock for making ethanol.
Hannagan said technical support for the March corn contract at the Chicago Board of Trade is pegged at US$3.78/bushel, with US$3.70 being the subsequent level. Resistance is likely at US$4.0/bushel.
At 0530 GMT, March corn rose 1.2 cents to US$3.82/bushel.
In Asia, China is struggling with a huge corn output, with analysts saying that the government may buy as much as 20 million tonnes for its reserves to shore up sagging domestic prices.
However, prices are being weighed down on concerns of sluggish demand in the near term.
In other news, Philippine feedmillers bought 90,000 tonnes of feed corn from Brazil so far this month, as output of the local crop this year has been below expectations.
The corn shipment is likely to land in the country in January. The Philippines levies a 35% import duty on corn, which would translate to a landed price of PHP13/kilogram, cheaper than the domestic price of PHP16/kilogram.