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Corn looks to China news

03/21/2011 @ 2:55pm

U.S. grain futures traded mixed Monday after wild swings last week as talk about corn sales to China lost some luster without confirmation from the government.

Corn for May delivery, the most actively traded contract, ended up 3 cents, or 0.4%, to $6.86 1/2 a bushel at the Chicago Board of Trade. Deferred contract months posted stronger gains on concerns about spring plantings.

The nearby May contract see-sawed between positive and negative territory before finishing with slight gains as many traders were disappointed the U.S. Department of Agriculture did not confirm U.S. exporters sold corn to China. Talk about the business pushed futures sharply higher late last week as the market rebounded from heavy selling early in the week.

"We've been unable to confirm anything in the world markets as far as China buying corn," said Tom Leffler, owner of Leffler Commodities in Kansas.

The USDA reported Monday that exporters struck deals to sell 116,000 tons of corn to unknown destinations for delivery in the 2010-11 marketing year, which ends May 31. Often a U.S. exporter agrees to sell a commodity to an intermediary that has not yet settled the final foreign destination of the commodity.

Market participants suspect the buyer may be China and that China may continue buying to replenish reserves for domestic use or, potentially, for selling to earthquake-battered Japan down the line. China, which has strived for self-sufficiency, would be an unexpected source of demand for the market and deplete supplies, already projected to reach a 15-year low this year due to strong domestic and foreign use.

Deferred-month contracts felt support from concerns U.S. farmers may not expand plantings enough this spring to replenish supplies. Corn for December delivery, which represents the crop that will be harvested next fall, jumped 11 cents, or 1.8%, to $6.09 1/2 a bushel.

Market participants are nervous wet weather could delay plantings of corn and spring wheat, traded at MGEX, and encourage farmers to plant soybeans, which are sown later in the spring than the grains. Flood-related planting delays will likely have little ultimate effect on yields, but "they could temper much-needed corn acreage this spring," Morgan Stanley said in a note to clients.

Soybean futures rose Monday, with the largest gains in deferred contracts representing the upcoming crop, on concerns plantings may still fall short of expectations. An estimate issued Friday by private analytical firm Informa Economics for soybean plantings of 75.3 million acres was 3.5% below a recent government estimate.

Soybean for May delivery closed up 1/2 cent, or 0.04%, to $13.63 a bushel, while soybeans for November delivery climbed 11 cents, or 0.8%, to $13.45. Soft red winter wheat for May delivery slipped 2 cents, or 0.3%, to $7.21 a bushel at the CBOT.

Other Markets

Ethanol for May delivery lost 0.08% to $2.481 a gallon at the CBOT, while oats for May delivery dropped 0.6% to $3.50 a bushel. May rice jumped 1.5% to $13.83 1/2 per hundredweight. May soyoil ended up 0.2% at 55.88 cents per pound, and May soymeal slipped 0.4% to $366.40 per short ton.

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