Corn Pares First Weekly Decline This Month as Investors Cut Bets

Corn pared its first weekly drop this month as investors reduced bullish bets on concern that unrest in the Middle East and Africa may curb global economic growth, slowing demand.

The May-delivery contract traded at $6.9775 a bushel on the Chicago Board of Trade at 3:46 p.m. Singapore time after losing 0.4 percent. It’s set for a 3.1 percent loss this week.

Long positions, or bets on corn-price gains, beat short positions by 483,324 contracts as of Feb. 15, according to Commodity Futures Trading Commission data. The net-long positions declined for a second week after rising to 498,177 contracts on Feb. 1, the highest level since 1996.

“We have witnessed corn futures decline due to global economic uncertainty and unrest in North Africa,” Ker Chung Yang, an analyst at Phillip Futures Pte, said in a report e- mailed today. “Those uncertainties in the outside markets were definitely a factor.”

The biggest weekly loss in corn in seven and drops in wheat and soybeans means speculators probably kept cutting positions this week, said Nic Johnson, who helps to manage about $30 billion in commodities at Pacific Investment Management Co. in Newport Beach, California.

Corn Stockpiles

Global corn stockpiles will slide for a third season in the year through June 2012 as record world production won’t be enough to satisfy rising demand, the London-based International Grains Council said yesterday.

World reserves are forecast to drop to a four-year low of 119 million metric tons at the end of June this year, 1 million tons less than forecast a month ago, because of increased demand from U.S. ethanol makers, the International Grains Council said.

China may become the world’s largest importer of corn “in the near future,” Rebecca Bratter, director of trade development for the U.S. Grains Council, said yesterday. The Asian nation, the world’s largest corn consumer after the U.S., became a net importer last year for the first time in 14 years.

China may buy 15 million tons of corn within five years because Chinese demand is rising as the population increases and a growing middle class buys more meat produced from corn- consuming livestock, Bratter said.

Wheat for May delivery gained as much as 1.2 percent to $7.9175 a bushel in Chicago before trading at $7.885. The contract is poised for a 7.9 percent loss this week.

Importers may be taking advantage of the slump in prices in the past two weeks to secure supplies, said Tetsu Emori, commodity fund manager at Astmax Co. Ltd. “At these prices, the grains are cheap,” he said, adding that demand from countries with deficits remains strong.

May-delivery soybeans added 0.4 percent to $13.35 a bushel in Chicago, set for a 3.3 percent loss this week.

(Source: http://www.bloomberg.com/news/2011-02-25/corn-set-for-weekly-drop-as-investors-cut-bullish-bets-amid-mideast-unrest.html)