July 5, 2010

 

 

Corn prices will likely be supported this week after USDA estimated both stockpiles and acreage below forecasts, but gains are expected to be limited unless weather conditions worsen.

 

Corn prices on the Chicago Board of Trade surged after the report was issued Wednesday (Jun 30), and gains were extended Thursday (Jul 1) with the nearby Chicago Board of Trade contract for deliver in July settling 11 1/4 cents, or 3.2%, higher at US$3.65 1/2. December corn ended 11 cents, or 2.9%, higher at US$3.84 1/2 a bushel.

 

"The market was digesting the news and is already seeing some downward correction (in electronic Asian-session trade), so prices could be steady for the next few days. Although demand is strong, there is also quite a lot of supply," said a Singapore-based executive at a global trading company.

 

"The supply is tighter than expected but I think the (supply-demand) situation is still comfortable for corn right now. The upside potential should be limited or rangebound, unless we see weather take a turn for the worse," a trading executive in Tokyo said.

 

The corn pollination season is approaching, so weather conditions over the next few weeks could set the tone.

 

"If the weather turns out to be good, then there is no reason for the market confidence to continue, but if the weather turns out to be hot and dry in the next week or two, then it's a totally different story," he said.

 

Soy and wheat futures on the CBOT also rose overnight on spillover support from corn futures, but the outlook for soy is more precarious.

 

Record-high soy stocks in Chinese ports could weigh on prices. June soy imports are likely to have reached 5.1 million tonnes, China's Ministry of Commerce said Thursday.

 

"China has bought so much that their ports cannot handle the cargo and they are all lining up to unload, so gains may be limited if purchases slow," the executive in Singapore said.

 

Wheat futures may find more room to rise, however, due to hot weather in parts of Europe and concerns over crop quality in Canada, Singapore-based Phillips Futures said in a research note.

 

In other news, Columbia Grain International has sold 25,200 tonnes of wheat to South Korea's Daehan Flour Mills in a tender, for shipment between September 10 and October 10, trading executives said Thursday.