December 14, 2007

South Africa corn ends extended limit up

South African near-dated white corn futures rose by an extended daily limit for the second straight day on Thursday (December 13, 2007), continuing to bounce back from oversold levels.

An extended daily limit is allowed if the market rose by the daily limit for two days in a row.

"We are back above the 1,800 rand per tonne level. I think the rally was also fueled by a strong performance Chicago overnight," one trader said.

The market suffered heavy losses last week after the country's Crop Estimates Committee's bearish corn production report and news that government policy will excluded corn as a feedstock for biofuel production.

The near-dated March white corn contract rose 54 rand to 1,814 rand a tonne, while new crop for delivery in July inched up 10 rand to 1,470 rand.

Expectations of bumper harvests and early rain don't support any significant price movement on the upside for the crop.

Farmers are expected to wrap up planting this week, and good early rain has raised speculation that each hectare of the estimated 2.75 million could yield up four tonnes each.

Prices for the new crop are expected trade in a narrow range of between 1,400 rand and 1,600 rand a tonne in the next few weeks, before pulling back to around 1,200 rand in the new year, traders said.

Shortly before the local market closed, the rand was bid at 6.72 to the dollar from its overnight close of 6.70.

1 rand = US$0.148 (Dec. 14)