BLBG:Corn, Soybeans Rally to Six-Month Highs as China Demand Outlook
Corn and soybeans extended rallies to the highest prices since September on speculation that China may boost purchases from the U.S., the biggest producer of both crops.
Jilin Corn Center Wholesale Market reported yesterday that government purchases of domestic grain have plunged this year to 1.2 million metric tons from 11 million a year earlier, a sign of tighter supplies in China that will lead to a jump in imports. On the Dalian Commodity Exchange, corn futures jumped to a record today. Soybean imports may rise more than 20 percent in the first half of 2012, Grain.gov.cn said March 12.
“The rising markets are a reflection of traders expecting increased Chinese purchases from the U.S.,” Jerry Gidel, the chief feed analyst at Chicago-based Rice Dairy LLC, said in a telephone interview. “Rising meat demand is driving Chinese consumption of feed.”
Corn futures for May delivery rose 0.6 percent to close at $6.73 a bushel at 1:15 p.m. in Chicago, after touching $6.7375, the highest price since Sept. 22. The grain rallied 4.3 percent this week, the largest gain since the end of January.
Soybean futures for May delivery advanced 0.4 percent to $13.74 a bushel in Chicago, after touching $13.775, the highest since Sept. 15. The oilseed rose 2.7 percent for the week, the fifth straight and the longest weekly rally since November 2010.
Corn and soybeans may rally next week as unusually warm, dry weather and drought conditions in parts of the northwestern Midwest may threaten this year’s crops and encourage farmers to withhold supplies left from last year’s harvest, Tim Hannagan, a grain analyst for PFT Best Inc. in Chicago, said in a telephone interview.
The average premium for corn at export terminals near New Orleans has climbed 30 percent in the past year, government data show. U.S. inventories before this year’s harvest are expected to drop to the lowest since 1996, the Department of Agriculture said March 9. Soybean premiums are 4.2 percent higher than a year earlier.
“The export-pipeline supply of corn and soybeans will shrink the next few weeks because farmers will fear the weather will prevent building stocks to more comfortable levels,” Hannagan said. “March is a month when investors pour money into the grain markets before the start of the growing season.”
Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show.
To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
