March 11, 2009

Chicago Board of Trade corn futures, a global benchmark for corn prices, is likely to rise in the near term on technical factors.

 

"CBOT corn prices are forming a double bottom on the price chart, which indicates positive momentum," said Nobuyuki Chino, a trader with Tokyo-based Unipac Grains.

 

Chino said the gains would likely be modest, however, since corn fundamentals and other markets remain bearish.

 

Demand for corn has been affected by slowing demand for animal feed and reduced offtake for ethanol production due to low crude oil prices.

 

In Japan, corn prices have risen over the past month to around US$217/tonne at present from US$200/tonne a month ago, Chino said.

 

"The increase in prices reflects gains in both CBOT corn prices and ocean freight costs," he said.

 

In electronic trading Wednesday, the CBOT May corn contract is at US$3.7525 a bushel, down 0.25 cents from Tuesday's close.

 

Chino said Japanese feedmillers haven't bought much corn since the last week of February, as they await the announcement of compound feed pricing guidelines for the second quarter of 2009 by the Japanese government.

 

Traders expect the government announcement by the end of next week, he said.

 

In the first three weeks of February, Japanese feedmillers bought 1.2 million-1.4 million metric tonnes of corn for the April-June quarter, which is a third of the total second-quarter import requirement, he said.

 

"I expect buying to pick up pace from the fourth week of March, once the government (announces) its price guideline," said Chino.

 

Japan is the world's biggest corn importer.

 

In deals this week, Japan's Ministry of Agriculture is expected to buy a total 112,000 metric tonnes of food wheat from the U.S., Australia and Canada in a tender to be concluded Thursday.