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Corn hits 'limit' up, again

03/18/2011 @ 9:39am

CHICAGO, Illinois (Agriculture.com)--For the second consecutive day, the CME Group corn market has hit 'limit' up Friday. Following fresh, bullish acreage estimates from a private firm, and confirmation of a China purchase of U.S. corn, the markets are seeing rising prices across-the-board.

At mid-session, the May corn futures are up the daily "expanded" limit of 45 cents at $6.91 1/2. The May soybean contract is 43 cents higher at $13.79.  The May wheat futures are 35 3/4 cents higher at $7.46. The May soymeal futures are $12.60 higher per short ton at $371.20. The May soyoil futures are $1.53 higher at $56.05.

In the outside markets, the NYMEX crude oil is $0.10 per barrel higher, the dollar is lower, and the Dow Jones Industrials are up 110 points

Reacting to the news of China corn purchases, one CME Group floor trader, requesting anonymity, says price will determine additional interest, going forward.

"Ok, we are now 70 cents above what China can buy corn for from other import customers. The gov't could buy duty-free,  that would be 14%. So, import equivalent then is around $6.95. Above that level, Chinese buying is rationed out or non economic, given their current price."

Tim Hannagan, PFGBest.com senior analyst, says the market is chewing on a lot of bullish news. "Chinese purchases of corn and talk of a power line to be connected Saturday to prevent a reactor meltdown, in Japan, has all the shorts buying out and some light buying entering."

Meanwhile, Informa, a private analyst firm, released bullish U.S. crop acreage estimates Friday. For corn, the firm estimates 2011 U.S. acres at 91.8 million, soybeans at 75.3 million,  winter wheat at 41.0 million, and spring wheat at 16.7 million.

"The numbers were low on soybean acres and at the low-end for corn. So, the numbers are price-supportive. We are just back to par here, at mid-session. And we are back to watching weather and waiting for real number on the 31st," the CME Group floor trader says.

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