Forexpros – Corn futures regained strength on Wednesday, pulling further away from a ten-month low amid speculation that the recent slump in prices will boost corn demand from China.
On the Chicago Mercantile Exchange, corn futures for December delivery traded at USD5.9738 a bushel during European morning trade, jumping 1.53%.
It earlier rose by as much as 1.6% to trade at USD5.9788 a bushel, the highest price since October 3.
The U.S. Grains Council said on Tuesday that it expected China’s corn harvest to total 166.6 million tonnes in the 2011-12 marketing season, following a tour of the nation’s corn crops in September.
The estimate is short of a Chinese official estimate of 182 million tonnes, and the U.S. Department of Agriculture’s 178.0 million tonnes.
The downbeat Chinese crop outlook boosted speculation that China would import more corn from the U.S.
The U.S. is both the world’s largest corn producing nation and the world’s largest exporter of the grain, while China is the world’s second largest corn consumer.
Corn prices found further support as market sentiment firmed up after a report in the Financial Times said that euro zone finance ministers are looking into ways to coordinate the recapitalization of European lenders after agreeing that additional measures are needed support the region’s banks.
Despite the recent sharp drop in prices, Swiss lender Credit Suisse raised its corn price forecast for the first quarter of 2012 to USD6.75 a bushel, up from a previous estimate of USD6.50 a bushel.
The bank expects corn prices to average USD7.00 a bushel in the second quarter of next year, citing resilient demand from ethanol plants and a potential rise in Chinese imports.
“The continued growth of intensive livestock farming and rising use of corn-based sweeteners will outstrip growth in domestic corn production, and hence push Chinese domestic stocks lower to the point where China will be forced to import,” the report said.
Elsewhere on the Chicago Mercantile Exchange, wheat for December delivery jumped 1.71% to trade at USD6.1475 a bushel, while soybeans for November delivery rose 1.01% to trade at USD11.7238 a bushel.
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