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Corn gains as traders trim risk

01/10/2013 @ 3:12pm

U.S. corn futures closed higher Thursday, their fourth straight day of gains, as traders continued to reduce risk ahead of Friday's government crop reports.

Chicago Board of Trade March corn rose 4 1/2 cents, or 0.6%, to $6.98 3/4 a bushel.

Positioning for the U.S. Department of Agriculture's supply-and-demand reports led to modest gains in corn futures prices. Analysts said the market's advances largely reflected traders shedding risk before Friday's reports.

"Today's trade was all about tomorrow's reports," said Chad Henderson, president of brokerage firm Prime Ag Consultants Inc. in Brookfield, Wis.

Traders are preparing for the USDA's release at noon EST Friday of final estimates for the U.S. corn and soybean harvests last year, the size of domestic grain inventories as of Dec. 1, and forecasts for grain inventories this year.




The possibility that the USDA data could spark volatile price moves encouraged market participants this week to buy futures in an effort to exit earlier bets that prices would fall. Corn futures fell 2% last week, and were down 5.3% in the past three weeks.

The corn market has produced exchange-imposed, daily trading-limit price moves in five of the past six January crop reports.

"The crop reports have a lot of potential moving parts, and that uncertainty opens the door for volatility," said Aaron Curtis, commodity risk consultant with MID-CO Commodities Inc. in Bloomington, Ill.

Corn prices Thursday also benefited from technical buying by chart-based traders, despite weak demand for physical supplies of the grain.

Weekly corn export sales reported Thursday were well below analysts' expectations, at just a net 1,000 metric tons for the week through Jan. 3. That continued a months-long trend of poor sales.

Uncertainty about the USDA reports led to trade positioning across wheat and soybean markets as well. Traders found it tough to derive direction before the USDA reports, producing a tepid reaction to fresh export sales announcements in wheat and soybeans.

Weekly wheat export sales reported on Thursday were on the low end of analysts' expectations at 233,700 metric tons in the week through Jan. 3, but a fresh sales announcement to Egypt offered confidence that U.S. wheat exports will further pick up after months of tepid demand.

The USDA reported net weekly soybean export sales of 406,800 metric tons in the week ended Jan 3, slightly above the high end of traders' expectations for a sales range of 200,000 to 400,000 tons. USDA also disclosed daily soybean export sales announcements to China and unknown destinations.

The March wheat contract ended down 1 cent, or 0.1% at $7.44 1/2 a bushel at CBOT. Kansas City Board of Trade March wheat dropped 4 3/4 cents, or 0.6%, to $7.96 1/2 a bushel, while MGEX March wheat finished down 1 1/4 cents, or 0.1%, at $8.39 1/4 a bushel.

CBOT soybeans for January delivery finished down 2 1/4 cents, or 0.2%, at $14.17 1/2 a bushel, and March soybeans settled down 5 3/4 cents, or 0.4% at $13.79 3/4.


-Write to Andrew Johnson Jr. at andrew.johnsonjr@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
January 10, 2013 15:48 ET (20:48 GMT)
DJ UPDATE: Corn Futures Extend Gains; Traders Curb Risk Before USDA Reports->copyright


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