Corn Gains for Third Day as Recent Price Decline Spurs Buying

By Jae Hur

Aug. 14 (Bloomberg) -- Corn rose a third day on speculation importers, including Japan and South Korea, are seeking the grain after prices fell to a six-month low this week.

South Korea, the world's third-biggest buyer of corn, plans to buy as much as 110,000 metric tons of corn at a tender today. The nation's Major Feedmill Group and members of the Korea Feed Association in Busan purchased 45,000 tons and 55,000 tons each yesterday, said two officials with knowledge of the trade.

``Corn prices close to $5 a bushel were enough to stoke interest among buyers who saw the price over $7 a month earlier,'' said Nobuyuki Chino, president of Tokyo-based grain trading company Unipac Grain Ltd. Japan, the world's top corn importer, is also seeking to buy the grain, he said.

Corn for December delivery, the most active contract, rose as much as 2.8 percent to $5.74 a bushel in after-hours electronic trading on the Chicago Board of Trade. It traded at $5.68 as of 3:37 p.m. in Singapore.

The contract gained the 30-cent daily limit yesterday after rising 2.2 percent the day before. Prices declined to $5.045, the lowest since Feb. 14, on Aug. 12. Futures have dropped 29 percent from the record $7.9925 reached on June 27.

In Japan, importers may have bought as much as 600,000 tons for feed production this week after purchasing about 150,000 tons last week, Chino said. Japan imports 12 million tons of corn for animal feed each year and about 4 million tons for food, he said.

Soybeans for November delivery advanced 23 cents, or 1.8 percent, to $13.07 a bushel and last traded at $12.97, gaining for a fourth day. The contract jumped the 70-cent daily limit yesterday. Futures are down 21 percent from the July 3 record of $16.3675 and touched $11.68 on Aug. 11, the lowest since April 1.

U.S. Farmers

``On the futures basis, prices fell by about $100 a ton for corn and $180 for soybeans within about a month,'' Chino said. ``However, U.S. farmers are reluctant to sell those because the prices fell too much.''

Soybeans and corn, which is also used to make ethanol, got additional support from a rally in crude oil, he said. Oil jumped 2.6 percent to $116 a barrel yesterday, the biggest one-day gain since July 30, and last traded at $117.01 today.

Wheat for December delivery advanced 14.75 cents, or 1.7 percent, to $8.90 a bushel after gaining the 60-cent daily limit yesterday. The most-active futures have dropped 34 percent since reaching a record $13.495 on Feb. 27.

To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net