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Warning over China drought helps corn higher

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A tour of China by US farm experts has fuelled expectations that China's corn crop will come in way below official forecasts, warning that it has been "really affected" by drought.

The US Grains Council (USGC), a trade body, said after a tour of more than 300 fields in four provinces that China's corn crop would come in at 148.8m tonnes.

The figure is line with estimates from Shanghai analysts JC Intelligence and Chinese processing giant Cofco, who have also warned of the impact of drought.

USGC director Cary Sifferath said: "The drought really affected parts of China's major corn producing regions, especially in western parts of Jilin and Liaoning provinces and eastern parts of Inner Mongolia province."

However, the figure is well below official estimates of a crop in line with last year's 166m tonnes.

Wheat support

The USGC added that China looked unlikely to import corn this year, despite the shortfall.

Nonetheless, the report helped December corn close 1.4% higher at $3.38 ¾ a bushel in Chicago.

A 1.3% rise in oil was also credited for supporting corn, a major source of biofuels, as was a recovery in wheat, which ended 6 cents higher at $4.55 ¾ a bushel for December delivery.

There is a growing feeling that the grain may have been oversold after a drop of more than 35% between June and a low two weeks ago. It has failed since to drop far below $4.50 a bushel.

Soybeans brought up the rear in Chicago, closing down 6.5 cents at $9.19 ½ a bushel, weighed down by the prospect of a heavy US crop.

By Agrimoney.com

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