Corn Rises Most in Almost Three Weeks as Speculators Slow Sales

Corn rose for a second straight day on speculation that a slump in prices this year may stall as farmers begin to plant crops in the U.S., the world’s largest grower and exporter.

“The risk-to-reward ratio does not favor selling until Midwest farmers begin planting” later this month, said Greg Grow, the director of agribusiness for Archer Financial Services in Chicago. “The drop in prices has lost momentum, and we could see some funds begin buying back short positions.”

Hedge and commodity funds more than doubled their net-short position last week, holding the biggest bet on lower prices in more than a year, government data show. Before today, corn futures slipped 17 percent this year to a five-month low on April 1. The 10-day relative-strength index fell below 30 for three straight days, signaling prices may rise.

Corn futures for May delivery gained 0.75 cent, or 0.2 percent, to $3.465 a bushel on the Chicago Board of Trade, after rising 0.4 percent yesterday, the first two-day gain since March 29.

On April 1, the grain touched $3.435, the lowest level for a most-active contract since Oct. 6. Before today, corn had the biggest decline after sugar and natural gas among the Standard & Poor’s GSCI Index of 24 commodities.

Short positions held by hedge and commodity funds exceeded long positions by 39,927 futures and options contracts as of March 30, up 168 percent from a week earlier, government data show. Speculators had been bullish, holding a net-long position, as recently as March 16.

Corn is the biggest U.S. crop, valued at $48.6 billion in 2009, government figures show. The U.S. is the world’s leading exporter.

Jeff Wilson
Source: Bloomberg