January 27, 2021

US corn futures surge 4%, soy also up

Corn futures on the Chicago Board of Trade (CBOT) surged 4% after news of new export sales to China sparked concerns about tightening United States and world grain supplies, while soybean futures are up because of a possible slow start to the Brazilian soy harvest, Reuters reported.

CBOT March corn futures ended 20-3/4 cents at US$5.32-1/4 per bushel. Soybeans closed 26-3/4 cents at $13.70-1/4 a bushel.

On a percentage basis, corn posted the biggest gains following a confirmed private sale of 1.36 million tonnes of US corn to China by the US Department of Agriculture. This was the biggest sale of the commodity since July last year.

Rich Feltes, vice president for research with R.J. O'Brien, said this is a demand-pull market, adding that analysts estimate China's 2020/21 corn imports to surpass current USDA projections of 17.5 million tonnes.

Feltes said the corn sale to China represents further tightening of US corn supplies, with a bigger need for a great yield in 2021.

On January 26, Archer Daniels Midland Co posted a 36% increase jump in fourth-quarter profit thanks to strong soy processing margins and major exports, especially to China.

On the other hand, Brazil's harvest delays have hindered the seasonal soybean export business shift to Brazilian suppliers. AgRural, an agribusiness research company, projected Brazilian soy farmers harvested only 0.7% of the planted area through January 21, much lower when compared to 4.2% a year ago.

Traders are monitoring the CBOT March corn and soybean futures for a possible return of the multi-year highs in mid-January following a sell-off last week.

- Reuters