Demand lifts corn futures Tuesday
U.S. corn futures rose 1.7%, to a two-week high Tuesday, as traders worried that demand for the grain is stronger than they had expected.
Corn for March delivery gained 11 1/2 cents, to $7.05 a bushel at the Chicago Board of Trade, the highest level since Feb. 11.
Futures climbed as signs emerged that recent price declines may have been too sharp at a time when U.S. supplies of corn are tight. The front-month contract had fallen to a six-week closing low Friday, pressured by a U.S. government forecast for a large domestic corn harvest this year.
Late Monday, the Chicago Board of Trade said market participants had removed 77 contracts for corn--or 385,000 bushels--from a registry of supplies available for delivery when the March contract expires March 14. That registry is now empty, meaning that the corn suppliers think the grain is more valuable than current market prices indicate and prefer to hold on to their stockpiles.
"The market is now scrambling for physical corn," said Jim Gerlach, president of A/C Trading Co., a Fowler, Ind., commodities brokerage.
Corn futures leapt to a nominal record last summer as the worst U.S. drought in decades withered crops in the Midwest. The hot, dry weather shrank the corn harvest and left supplies tight, despite expectations early in the growing season for record corn production. Corn prices later declined as the high prices choked off demand from foreign buyers and ethanol producers.
Demand from those corn buyers remains subdued, but recent signs of improvement have rekindled concerns about tight supplies.
On Monday, the U.S. Department of Agriculture reported private export sales of 127,000 metric tons of corn booked for delivery to unknown buyers, a sign that recent weakness in export demand may be improving.
Ethanol production, a key source of corn demand, remains weak but has similarly improved. A U.S. government report last week estimated domestic ethanol production of 797,000 barrels a day in the week through Feb. 15, up 3.5% from a low point reached three weeks earlier.
Expectations for corn demand from the livestock and poultry sectors--which use the grain in animal feed--have also grown in recent months.
Wheat futures were pulled higher Tuesday by the gains in corn prices, since both grains are used in animal feed.
CBOT March wheat rose 6 1/2 cents, or 0.9%, to $7.05 3/4 a bushel. KCBT March wheat rose 1 1/4 cents, or 0.2%, to $7.32 3/4 a bushel. MGEX March wheat rose 2 cents, or 0.3%, to $7.89 a bushel.
Soybean futures fell slightly, pressured by expectations for large South American crops to replenish depleted global supplies over the next few months.
March soybean futures fell 3 1/2 cents, or 0.2%, to $14.47 3/4 a bushel.
--Andrew Johnson Jr. contributed to this article.
Write to Owen Fletcher at email@example.com
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(END) Dow Jones Newswires
February 26, 2013 16:16 ET (21:16 GMT)
DJ UPDATE: U.S. Corn Rises On Signs Of Stronger Demand->copyright
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