Corn Extends Biggest Gain in More Than a Year as Wheat, Soybeans Decline

By Luzi Ann Javier - Oct 12, 2011 10:19 AM GMT+0700

Corn increased, extending the largest advance in 16 months, on signs last month’s 23 percent slump may have attracted buyers seeking to rebuild stockpiles.

December delivery corn added as much as 1.2 percent to $6.525 a bushel on the Chicago Board of Trade, after jumping 6.6 percent yesterday, the biggest closing gain for a most-active contract since June 30, 2010. It traded at 6.48 a bushel at 11:15 a.m. Singapore time, narrowing the decline from this year’s high of $7.93 reached on June 9 to 18 percent.

Mexico, the second-largest corn buyer, bought 261,200 metric tons of corn from U.S. exporters, the U.S. Department of Agriculture said yesterday. Separately, the USDA reported that the grain inspected for export rose 8.7 percent to 31.8 million bushels in the week ended Oct. 6, from a week earlier.

“Export business is forecast to return with values at these levels,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, wrote in a report today. That outlook “was vindicated by the big purchase of 261,000 tons of U.S. corn by the Mexicans,” he said.

The corn inspected included 4.7 million bushels bound for China, the second-largest user of the grain, the USDA said.

The agency will release today its latest estimates on global corn supply and demand, which may show higher inventories than earlier forecast, according to a Bloomberg News survey.

Global Inventories

World stockpiles will probably reach 120.5 million tons at the end of this season, higher than last month’s 117.4 million- ton projected by the USDA, according to the average estimate of analysts surveyed by Bloomberg. That will still be the lowest level for reserves in five years, according to Bloomberg data.

“While U.S. corn stocks are forecast to be revised higher, supplies will remain tight by historic standards,” Mathews said.

Wheat for delivery in December declined as much as 1.1 percent to $6.535 a bushel before trading at $6.565 a bushel. It jumped 8.1 percent yesterday, the biggest closing gain since Oct. 8, 2010.

Soybeans for delivery in November fell as much as 1.9 percent to $12.115 a bushel, after closing 4.9 percent higher yesterday, the biggest advance since Oct. 8, 2010.

“The market had a pretty strong bounce overnight,” Victor Thianpiriya, an agricultural commodity analyst at Australia & New Zealand Banking Group Ltd., said by phone from Melbourne. “We’re probably seeing some repositioning ahead of the USDA report.”

Global soybean stockpiles may reach 63.35 million tons at the end of this season, bigger than the 62.55 million tons forecast by the USDA last month, according to the average estimate of analysts surveyed by Bloomberg News.

About 51 percent of the soybeans planted in the U.S., the world’s largest grower and shipper, have been harvested as of Oct. 9, up from 19 percent a week earlier, the USDA said yesterday. About 56 percent of the U.S. crop was in good to excellent condition as of Oct. 9, compared with 54 percent a week earlier, it said.

To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net