March 15, 2012

 

US old crop corn prices to rise on tight supplies

 

 

US grain analyst said Wednesday (Mar 14) that US old crop corn prices are set to rise due to tight supplies, extending a 2% rally this week on expectations of Chinese purchases to cover a shortfall in domestic stocks.

 

US old crop corn was expected to reach a range between US$6.80-7.20 per bushel, Dan Basse, president of Chicago-based consultancy AgResource Co, said on Wednesday.

 

"It will happen by early July because of tight stocks," Basse told reporters at an industry conference in Singapore.

 

Old-crop corn, which was up 0.2% at US$6.72-3/4 a bushel by 0526 GMT, racked up its biggest rally in almost three months on Monday, helped by tight supplies of grain harvested last autumn and amid talk of China buying.

 

Chinese feed mills are eager to import US corn as domestic prices of the grain are at a steep premium to imports, although cash traders have not confirmed the signing of any new deals.

 

Basse also expected China's corn imports to come in at 6-8 million tonnes in 2012/13.

 

"We saw modest growth in corn use for ethanol this year," he added. "It will be five billion bushels for this year and next year. This is because we have already maximised the use of ethanol in fuel supply."

 

Chicago Board of Trade corn for May delivery was up 0.04% at US$6.61-3/4 a bushel, and soy had risen 0.5% to US$13.55-1/2, after touching a five and a half month high on Tuesday.

 

Old crop soy prices are seen around US$13.80-14.20 per bushel, Basse added.

 

"There is still more upside potential for soy because of a smaller crop in Latin America," he said.

 

Soy has been supported by lower supplies from Brazil and Argentina following a drought in the crucial growing phase in January and February.

 

The USDA said in a report on Friday the drought had reduced the soy crop in Brazil, the world's No. one exporter, by 9% in the past three months and the crop in Argentina by 11%.