July 12, 2011


CBOT corn prices to increase further



CBOT corn prices, which soared in the previous week due to weather concerns and strong Chinese purchases, may surge further if the USDA's monthly supply-demand report due Tuesday (Jul 12) offers supportive signals.


"At the moment, we are waiting for the USDA report for clarity on planting concerns and weather prospects in the Midwest," said a research deputy general manager. "This is a crucial point for the market."


CBOT corn hit a one-week on high Friday (Jul 8) amid worries over yield losses due to persistent hot weather in the ongoing pollination season, and may continue to test the upside if Tuesday's report is supportive.


CBOT December corn ended up 3.5% at US$6.37 a bushel and may move in a US$6.00-6.60 range this week, the manager said.


Last week, China bought 540,000 tonnes of US corn for delivery after August, the USDA said. The agency had previously forecast that China's imports for the whole year would reach only 500,000 tonnes.


The news drove prices higher on Thursday (Jul 7) and Friday (Jul 8), breathing new life into a downbeat market after a three-week slump.


Traders said they believe China is on the verge of buying millions of tonnes of US corn, which would tighten US grain supplies even as farmers tend to what is expected to be a record corn harvest.


China's June corn exports rose 1% from a year ago to 9,544 tonnes, down sharply from 27,491 tonnes in May, the country's General Administration of Customs said on Sunday (Jul 10).


"China and other Asian countries tend to take buying opportunities when prices are low, and that will keep any downside limited for now," the manager said.


On soy, the manager said CBOT November soy may move in a US$13.40-13.80 range. CBOT November soy ended 8 3/4 cents higher at US$13.46 1/2 a bushel Friday.


China's June soy imports fell 31% from a year ago and 6% from May to 4.3 million tonnes, customs data showed.


The figure was far below the Ministry of Commerce's forecast of 5.4 million tonnes, reflecting slowing demand in China, the world's top importer.


Total imports in the January-June period fell 8% to 23.71 million tonnes.


Domestic crushers have been reeling under losses for over six months due to high global prices and Beijing's price caps on edible oils, resulting in several cargo cancellations.


Port inventories of soy have topped seven million tonnes and are expected to rise further, as crushers in June used less beans than were imported, the state-controlled China National Grain & Oils Information Center said in a research note.


"In the next few months, China's soy demand is expected to weaken further due to lower consumption, impacting global prices," it said.

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