Corn ends higher, anxiety over China rumours

CHICAGO: Corn futures ended higher in volatile trading on Monday, with expectations still high for confirmation of rumored US corn sales to China, which rallied the market by 11% over two days last week. Some traders speculated the US government's announcement of Monday that 116,000 tonnes of old-crop US corn was sold to an unspecified buyer was actually for China, the world's second largest consumer of the grain. Last Thursday, the US Agriculture Department announced a similar sale, also to an unidentified buyer.

"There's a possibility it could be for China but there's nothing confirmed. China is always testing the water so there is a possibility it could be for them," said Terry Reilly, analyst for Citigroup, of the Monday sale. The rumors, which last week took corn futures higher by their daily 40-cent trading limit on Thursday and by the expanded 45-cent limit on Friday, continued to be the talk of the grain trading floor on Monday. "Half the commercials say they (China) did, and half say they didn't," said Joe Bedore, CBOT floor manager for trade house Intl/FC Stone.

In earlier dealings corn fell, reversing the overnight trend, as rumors of China buying a large quantity of corn from the United States went unconfirmed. "The market would surely do better if we got confirmation of the China purchase," said Bill Nelson, analyst for Doane Advisory Services, St. Louis, Missouri.

"Absent that, there's a lack of upside follow-through and technicals turned negative as trendlines became resistance." Gains in corn also were limited by a report from Goldman Sachs predicting US corn acreage this year at 92.1 million (37.3 million hectares), above the US Department of Agriculture's current estimate for 92.0 million. USDA will release its first plantings data for 2011 based on a farmer survey on March 31.

(Source: http://articles.economictimes.indiatimes.com/2011-03-23/news/29178209_1_corn-futures-china-purchase-grain)