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Corn surges on USDA positioning

04/09/2013 @ 3:28pm

U.S. corn futures rose Tuesday on positioning ahead of a government crop report and strong prices for spot corn on cash markets.

Chicago Board of Trade May corn futures settled up 10 3/4 cents or 1.7% at $6.44 1/4 a bushel.

Many market participants who recently placed bets on lower corn prices appeared to buy futures to exit those bets and book profits on Tuesday, pushing prices higher, traders said. Speculative traders piled on such short bets as futures prices plunged after the U.S. Department of Agriculture on March 28 reported domestic corn supplies were much higher than expected.




Corn futures bottomed out Friday, when prices settled at a nine-month low, and began recovering Monday.

The positioning comes ahead of a monthly supply-and-demand report due from the USDA on Wednesday. Traders want to see how the USDA adjusts its forecasts based on the March report that found high recent stocks.

Analysts on average expect the USDA to forecast that U.S. corn inventories as of Aug. 31, the end of the current crop year, will total 824 million bushels, according to a survey by Dow Jones Newswires. That would be up 30% from the USDA's forecast last month of 632 million bushels, and down 17% from inventories at the end of the last crop year.

Corn also rose on strong cash markets for the grain. While futures prices have dropped, cash markets have remained strong, meaning buyers of physical corn in many regions still have to pay a high premium over futures prices to obtain supplies.

Cash bids for spot corn supplies at midday Tuesday at the Louisiana Gulf region, an export hub, were 58 cents above the price of May corn futures, up two cents from Tuesday morning and up four cents from midday Monday. Cash markets in the Midwest also generally remain strong.

Corn prices also benefited Tuesday from concerns about possible planting delays amid cold, wet weather in the Midwest. "We had really beat up on the corn complex on the prospect of supply being overwhelming going into the fall, and the recent weather pattern" has raised the prospect of a later harvest, said Dave Marshall, commodity marketing adviser for advisory firm TCFG LLC in Nashville, Ill.

Later planting could make some corn crops more vulnerable to peak summer heat during their key development stages, and some farmers who can't plant corn early enough may plant soybeans instead.

Wheat futures fell on improved crop conditions in the Plains after recent rain and snowfall, and on uncertainty about precisely how much wheat China has bought from the U.S. recently.

China National Grain Reserves Corp., also known as Sinograin, bought more than 700,000 metric tons of soft, red winter wheat from the U.S. recently to take advantage of lower prices to fill reserves, trading executives said. But no major sales to China have shown up in USDA reporting systems, leading to uncertainty among traders and pressure on futures.

CBOT May wheat fell 3 3/4 cents or 0.5% to $7.08 3/4 a bushel. KCBT May wheat rose 1 1/2 cents or 0.2% to $7.46 1/2 a bushel. MGEX May wheat settled flat at $7.99 3/4 a bushel.

Soybeans rose on positioning ahead of the USDA report and a continued recovery after price declines last week.

May soybean futures rose 17 1/2 cents or 1.3% to $13.95 1/2 a bushel.


Write to Owen Fletcher at owen.fletcher@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
April 09, 2013 15:06 ET (19:06 GMT)
DJ U.S. Corn Ends Higher on Positioning, Cash Markets->copyright


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