Corn Futures Head for Weekly Gain as U.S. Inventory Declines

Corn futures are little changed, set for the first weekly gain in three weeks, after the U.S. pared its forecast for the nation’s inventory of the grain to the smallest since 2007 on higher demand from ethanol producers.

Corn for December delivery, the contract with the biggest open interest, was little changed at $3.6425 a bushel on the Chicago Board of Trade at 11:21 a.m. Singapore time, poised for a 1.3 percent advance this week. The contract jumped as much as 2.7 percent yesterday, after the U.S. Department of Agriculture released its estimate.

Inventories in the U.S., forecast to account for 57 percent of global corn exports in the 2010-2011 marketing year, may be 1.603 billion bushels on Aug. 31, as the nation uses more of the grain to make ethanol, the USDA said in a report yesterday. The USDA also trimmed its world corn inventory at the end of the 2010-2011 year by 4.5 percent from last month.

“The numbers are definitely supportive of corn,” Michael Pitts, director for commodity sales of National Australia Bank Ltd. said by telephone from Sydney today. “That’s a bit of a surprise to the market” and prices may be supported through next week, he said.

The global corn inventory will be 147.32 million tons at the end of the 2010-11 marketing year, down from last month’s estimate of 154.21 million tons, according to the USDA forecast.

The USDA also raised its estimate on corn imports by China, the world’s second-largest consumer, in the year ending Sept. 30 to 1 million tons, the highest in 14 years, from 300,000 tons last month, as it boosted its outlook on global trade.

Soybeans for November delivery added 0.3 percent to $8.97 a bushel at 10:05 a.m. Singapore time, paring the weekly loss to 0.3 percent.

Chinese Imports

The USDA yesterday raised its forecast on China’s soybean imports by 1 million tons from its May estimate, to a record 47 million tons in the year to Sept. 30. The U.S., forecast to account for 46 percent of global exports this year, sold 22.1 million tons of the oilseed to China as of May 27, the USDA said.

Still, global soybean inventory will be at a record 65.47 million tons before this year’s harvest and will rise further to 66.99 million tons next year, the USDA said.

Wheat for July delivery added 0.2 percent to $4.34 a bushel at 10:17 a.m., paring the weekly loss to 0.4 percent.

Winter-wheat production in the U.S., the world’s largest exporter of the grain, will drop to 1.482 billion bushels in the year that began June 1, the smallest volume since 2006, because of planting delays, the nation’s Department of Agriculture said in a report yesterday. The average estimate of 20 analysts surveyed by Bloomberg was 1.442 billion bushels.

The USDA also pared its global stockpile estimate to 193.9 million tons at the end of the 2010-2011 season, from 198 million tons in May.

Luzi Ann Javier
Source: Bloomberg