Corn Set for Bull Market as U.S. Exports Rise Amid Ukraine Worry

March 7, 2014 02:43 AM
Corn Set for Bull Market as U.S. Exports Rise Amid Ukraine Worry

Corn rose to the highest in more than six months and was set for a bull market as U.S. weekly export sales showed rising demand amid tensions between Russia and Ukraine and deteriorating crop prospects in Brazil.

U.S. export sales of corn for delivery in the 2013-14 season surged 81 percent in the week ended Feb. 27, the country’s Department of Agriculture reported yesterday. On average, deals for the grain in the past four weeks rose fivefold from a year earlier.

Importers may opt for more American corn amid Ukraine’s escalating tension, according to the U.S. Grains Council. While ports are open and vessels are loading, farmers may hold on to commodity supplies as a hedge against a declining currency, it said. Corn climbed 19 percent through yesterday from this year’s settlement low in January, also on declining prospects for South American crops.

"It was a very good sales number," Michael Pitts, a commodity sales director at National Australia Bank Ltd. in Sydney, said by phone today, referring to the corn export data. "Ukraine is providing a little bit of uncertainty and an uplift for commodity prices generally."

Corn for May delivery rose 2.1 percent to $5.0125 a bushel on the Chicago Board of Trade by 6:26 a.m., earlier it advanced as much as 2.3 percent to $5.025, the highest for the most- active contract since Aug. 27. A settlement at that price would be a 22 percent gain from $4.12 on Jan. 9, with a bull market commonly defined as a 20 percent gain from a closing low.


Ukraine Shipments


Ukraine may export 18.5 million metric tons of corn in 2013-14, making it the third-biggest shipper behind the U.S. and Brazil, the USDA forecasts. The country is the sixth-largest wheat exporter.

Wheat for May delivery gained 1.9 percent to $6.585 a bushel, earlier touching $6.5875, the highest level since Dec. 5. U.S. exports last week topped estimates by analysts. The grain advanced 17 percent through yesterday from $5.515 on Jan. 29, the lowest close since July 13, 2010.

Milling wheat for November delivery advanced 1.8 percent to 199 euros ($277) a ton after earlier touching 199.75 euros, the highest for the contract since June 21.

The U.S. and European Union put Russian President Vladimir Putin on notice that they will be united on imposing sanctions if he’s unwilling to defuse the Ukraine crisis and pursue a negotiated solution. U.S. President Barack Obama signed an order authorizing financial sanctions, while EU leaders halted trade and visa talks with Russia and threatened punitive economic measures in what’s become the worst rift between Russia and the West since the Cold War era.

Soybeans for May delivery gained 1.4 percent to $14.5825 a bushel in Chicago. Soybean oil advanced 1 percent to 44.93 cents a pound, the highest for a most-active contract since Sept. 3. The commodity entered a bull market yesterday, settling at 44.49 cents, up 20 percent from the Jan. 27 closing low of 37.06 cents.

As much as 15 percent of the soybean crop yet to be harvested in central Brazil may be damaged by as much as 5 inches (13 centimeters) of rain through early next week, Commodity Weather Group LLC said yesterday in a report.

Excess moisture may delay more corn planting, boosting the risk of lower yields in Brazil, the second-biggest exporter, the forecaster said.

The outlook for global soybean output in the 2013-14 season was cut by Oil World this week to 278.8 million tons from 280 million tons predicted a week earlier and 287.8 million tons in January. Brazil’s Mato Grosso state suffered excessive rainfall, while Parana faced dry weather, the researcher said.



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