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Supply worries kick corn into the black

03/12/2013 @ 5:03pm

U.S. corn futures settled higher Tuesday, boosted by technical buying and concerns about tight supplies.

Chicago Board of Trade May corn futures settled up 3 cents or 0.4% at $7.14 1/4 a bushel, trading higher for a fourth straight session, and reaching a fresh one-month closing high.

March corn, a thinly traded contract set to expire Thursday, rose 6 1/2 cents or 0.9% to $7.41 a bushel, a three-month closing high for the front-month contract.

May corn futures on Monday had settled above their 50-day moving average, a positive technical signal that fueled more buying on Tuesday. The contract on Tuesday surpassed Monday's intraday high of $7.16 1/4 a bushel, but failed to hold above that level.



Futures also continued to rise on concerns about tight supplies. The U.S. Department of Agriculture on Friday left unchanged its forecast for U.S. corn stockpiles as of Aug. 31, the end of the marketing year, to total 632 million bushels. Analysts had expected a higher forecast.

Further highlighting tightness in corn supplies, some ethanol plants are looking to buy wheat to replace some of the corn used to make the biofuel, and Midwest-grown winter wheat has been shipped to the Plains for use in animal feed, said Bryce Knorr, an analyst with trade publication Farm Futures. That is noteworthy since the southern Plains are a major wheat-producing region, Mr. Knorr said.

Wheat-feeding is likely to expand further, since wheat futures are trading at a lower price than corn, and both grains can be used in feed, traders say.

The use of wheat by ethanol producers "is an indication that the plants just cannot find corn without hauling it in from extremely long distances," Mr. Knorr said. "There's just no corn out there to be had."

U.S. cash-corn markets are historically strong for this time of year, as buyers are having to offer higher prices to encourage corn owners to sell supplies. Cash merchants in Decatur, Ill., a major grain-processing area, are paying 41 cents above CBOT May corn futures.

U.S. wheat futures also rose for a fourth straight session, lifted by the rise in corn and the expectation for greater wheat-feeding.

CBOT May wheat settled up 3 1/2 cents or 0.5% at $7.03 1/2 a bushel. KCBT May wheat fell 1 cent or 0.1% to $7.35 1/4 a bushel. MGEX May wheat fell 2 1/2 cents or 0.3% to $7.91 1/2 a bushel.

U.S. soybean futures fell, pressured by profit-taking and concerns that Chinese demand may be waning.

May soybean futures fell 10 3/4 cents or 0.7% to $14.68 3/4 a bushel.


-Andrew Johnson Jr. contributed to this article.
Write to Owen Fletcher at owen.fletcher@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
March 12, 2013 15:58 ET (19:58 GMT)
DJ UPDATE: U.S. Corn Rises on Technical Buying, Tight Supply->copyright


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