PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 19:03 UK, 27th Apr 2012, by Agrimoney.com
Huge corn deal, US frost send grain prices soaring

Ag futures soared - with soybeans prices returning back over $15 a bushel for the first time in nearly four years and corn and wheat futures soaring more than 3% - after a flourish of importer orders and a hard frost dents hopes for US supplies.

Chicago soybeans for May hit $15.09 a bushel at one point, the highest for a spot contract since July 2008, before losing ground in later deals.

Corn for May rose 5%, recovering its losses of the past two weeks, while wheat gained nearly 3%.

The rally followed the US Department of Agriculture's unveiling export orders for US corn of 1.56m tonnes - the biggest one-day sales in more than 20 years.

 'Certainly looks like China'

While most was booked to "unknown destinations", the corn was presumed by investors as sold to China, which booked a confirmed order of 120,000 tonnes, and took to 2.8m tonnes US corn sales revealed this week through its daily alert system, which applies to larger orders.

Friday's closing oilseed, grain prices

Chicago corn, May: $6.53 a bushel, +5.0%

Chicago corn, July: $6.25 ½ a bushel, +3.0%

Chicago wheat, May: $6.42 ¼ a bushel, +2.6%

Paris wheat: May: E213.75 a tonne, +1.3%

Chicago soybeans, May: $14.96 ¾ a bushel, +1.1%

London wheat: May: £178.50 a tonne, +0.6%

Chicago has continued to echo to rumours this week of corn sales of some 2m tonnes to China, the world's second-ranked corn user, whose growing demand for the grain, largely to feed its pig herd and meet growing demand for pork, has tested its historic self-sufficiency.

"It certainly looks like China, and that's the way the market is taking it," Jerry Gidel, feed grains analyst at broker Rice Dairy, said.

'Dramatic inverse'

At Country Futures, Darrell Holaday said: "The buying from China has been a shot in the arm for the corn market," noting in particular the jump in the close-to-expiry May contract, which gained nearly $0.13 a bushel on the day over the July lot.

Typically, the July contract would hold the premium over the nearer-term contract.

"The short squeeze in the May corn contract has become one of the most dramatic inverses in history," Mr Holaday said.

Rival broker US Commodities noted that corn prices on China's Dalian exchange closed overnight "near record highs", and at the equivalent of more than $9.60 a bushel, with soybeans priced above $19.20 a bushel.

Record bookings 

Indeed, the USDA also confirmed export orders of 216,000 tonnes of soybeans, half to China - the day after releasing weekly sales figures which, at 1.4m tonnes, trounced market expectations and stoked expectations of an upgrade to trade forecasts.

Friday's sales were actually for soybeans from this year's harvest, taking total commitments for 2012-13 so far to 8m tonnes, four months before the marketing year even begins, and before most of the  crop has been sown.

Indeed, the level of advance orders is a record at this stage, and equivalent to roughly 20-25% of what the US might expect to ship during the season.

The appetite for importers to book so far ahead reflects a disappointing South American harvest, which is continuing to attract downgrades following frost in Argentina, which has further damaged unharvested crops tested already by drought.

'Hard freeze'

Frost has also hit parts of the US, representing a serious threat to winter wheat crops which, thanks to an unusually warm start to spring, have developed some two weeks ahead of schedule.

"A hard freeze developed overnight in key Midwest wheat states - Ohio, Michigan and Indiana," Gail Martell, at Martell Crop Projections, said, noting that 19% of wheat in Indiana had reached the headed stage of development.

Rice Dairy's Mr Gidel said: "When wheat gets to the jointing stage it needs some four hours at 28 degrees Fahrenheit or less to damage it. When it is headed, it just needs about 30 Fahrenheit for a couple of hours."

Ohio, Michigan and Indiana between them produce some 30% of soft red winter wheat, the type traded in Chicago, and areas further south growing hard red winter wheat, as traded in Kansas, may be hit by the next wave of frost this evening.

Ms Martell said: "Temperatures may fall into the low or mid 30s Fahrenheit tonight in north west and west-central Kansas," adding that "adjacent wheat areas in Colorado and western Nebraska also may be subject to frost", if not as severe a freeze as that which hit the Midwest states last night.
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