Corn Nears 30-Month High as Demand May Expand; Wheat Advances

Corn futures climbed to near a 30- month high on optimism that demand will to continue to expand amid tight supply. Wheat and soybeans also advanced.

May-delivery corn, the contract with the most open-interest, gained as much as 0.4 percent to $7.125 a bushel on the Chicago Board of Trade and was at $7.1125 at 3:12 p.m. in Singapore. The contract reached $7.15 yesterday, the highest level for the most-active since July 2008. March-delivery corn traded at $7.0075 a bushel, set for 3.3 percent weekly gain.

“Tight supply for corn and better-than-estimated export sales helped boost gains,” Ker Chung Yang, an analyst at Phillip Futures Pte, said by phone from Singapore. Advances in corn have a spillover effect on wheat, he said.

U.S. export sales of corn in the week to Feb. 3 were 51 percent above the average of the prior four weeks, while U.S. inventories before the harvest will be equal to about 18 days of consumption, on par with the record low in 1996, according to the U.S. Department of Agriculture.

Corn will average $7.25 a bushel in the second quarter, up from an average of $6.4775 since Jan. 1, Luke Chandler, global head of agricultural commodities at Rabobank International, said in a report yesterday. The grain will climb to a record in the coming months, the report said, beating the 2008 peak of $7.9925.

U.S. inventories before the harvest are forecast to fall to the lowest in 15 years, Chandler said. “We see corn as the upside leader” in agricultural commodities, he said.

China Drought

Wheat for March delivery, the contract with the biggest volume, gained 0.7 percent to $8.69 a bushel on the Chicago Board of Trade after losing 2.6 percent yesterday. The contract is heading for a fourth weekly advance.

“A sharp drop in the wheat market yesterday drew bargain- hunting,” said Phillip Futures’ Ker. “There is strong demand for wheat, especially from Asian countries.”

Global wheat harvests may trail demand for a second year, as drought persists in China, the largest grower, Abdolreza Abbassian, a senior economist at the United Nations’ Food & Agriculture Organization in Rome, said in an interview Feb. 9.

The provinces hit hardest in China are Shandong, Jiangsu, Henan, Hebei and Shanxi, which provided 67 percent of production in 2009, the FAO said on Feb. 8. China has 14 million hectares (34.6 million acres) planted with winter-wheat in those areas, of which about 5.16 million hectares may have been hurt, it said.

Soybeans for March delivery, the contract with the largest open interest and volume, gained 0.4 percent to $14.3825 a bushel. The oilseed reached $14.5575 on Feb. 9, the highest price for a most-active contract since July 2008.

Rice for March delivery declined for a second day, falling as much as 0.8 percent to $16.035 per 100 pounds. The grain reached $16.335 on Feb. 9, the highest since Nov. 5, 2008.

Rice may track a rally in wheat prices as consumers seek alternatives, according to Robert Zeigler, director general of the International Rice Research Institute.

“If wheat production falls, people will have to substitute with something in their diet: rice is the easiest one,” Zeigler said in an interview on Bloomberg Television today. There are no signs of panic buying at this stage, he said.

(Source: http://www.bloomberg.com/news/2011-02-11/corn-nears-30-month-high-as-demand-may-expand-correct-.html)