Tight Supplies Boost Corn Futures to One-Week High

June 18th, 2013

By:

Category: Grains, Oilseeds

Corn showing gains(The Wall Street Journal) – U.S. corn futures finished higher Monday, with the spot July contract rallying to a one-week high amid tight domestic stockpiles of the grain.

Chicago Board of Trade corn for July delivery finished up 13 1/2 cents, or 2.1%, at $6.68 1/2 a bushel. The December contract settled up 5 1/2 cents, or 1%, to $5.38 1/2.

A tight near-term supply situation has supported corn prices for months, since droughts last year in the U.S. shrunk available stockpiles.

Cash basis levels have firmed up recently as farmer sales of stored inventories have slowed. Basis refers to the premium in cash prices for corn over futures prices.

“Strong cash basis levels served as a supportive factor for corn futures Monday,” said Jason Britt, president of brokerage Central States Commodities in Kansas City, Mo.

“The spot basis is at some of the highest levels ever for this time of year.”

Tight physical stockpiles of U.S. corn are supporting nearby prices as food processors, ethanol plants and livestock companies push for limited available supplies to cover demand needs through the summer.

“It’s just tough to acquire supplies, with buyers forced to boost prices to encourage farmers focused on planting to market stored supplies from last year’s harvest,” Mr. Britt said.

Deferred corn futures ended higher, but lagged the gains in contracts for near-term delivery amid expectations for a large U.S. harvest this fall. Current weather forecasts are mostly favorable for the corn crop, with mostly warm and dry conditions predicted over the next week.

Soybean futures fell Monday, declining after lighter-than-expected weekend rains in the Farm Belt eased concerns about planting delays. Traders anticipate that warm, dry weather across the Midwest will allow farmers to finish seeding the 2013 crop.

However, spot futures pared most of their early losses, supported by tight supplies. Nearby soybean contracts were also buoyed by strong demand reflective of higher-than-expected soybean crushings in May reported by the National Oilseed Processors Association Monday.

CBOT soybeans for July delivery finished down 4 cents, or 0.3%, at $15.12 1/2. The November soybean contract settled down 12 3/4 cents, or 1%, to $12.85 1/2.

U.S. wheat futures finished mixed, drawing weakness from seasonal pressure as the harvest of winter wheat progresses, while higher corn prices provided support. Wheat and corn will trade in tandem as both are feed ingredients for livestock and influence each other.

July wheat futures ended down 1/4 cent, or 0.04%, at $6.80 1/2 a bushel at the Chicago Board of Trade. Kansas City Board of Trade July wheat climbed 5 1/2 cents, or 0.8%, to $7.17 a bushel. MGEX July wheat finished down 3 3/4 cents, or 0.5%, at $8.00 1/4 a bushel.

Add New Comment

Forgot password? or Register

You are commenting as a guest.