GRAINS – Corn Rises 2% on Speculation of Chinese Purchases, Soybeans Stable – Reuters

Market Update: Commodity Prices React to Developments

• Corn prices surge on news of Chinese purchases of Latin American cargoes.
• Soybean prices remain relatively stable after significant declines; wheat sees a 0.7% increase.
• Speculations around China’s tightening policies impact commodity markets.
• Technical indicators suggest a new bearish target for soybeans at $12.36 per bushel.

By Naveen Thukral

SINGAPORE, Nov 15 (Reuters) – U.S. corn futures climbed more than 2% on Monday as bargain hunters entered the market following Friday’s downturn, driven by reports that China purchased cargoes of Argentine corn. Wheat prices rose by 0.7%, buoyed by Iraq’s recent acquisition of U.S. wheat, while soybean prices showed little change, lingering near two-week lows.

"The rebound is partly due to discussions about China’s corn purchases and ongoing trade activities in South America," noted Garry Booth, a trader with MF Global Australia. "Additionally, the Iraqi wheat tender on Friday saw both Australia and the U.S. securing further business."

As of 0442 GMT, December corn at the Chicago Board of Trade increased by 2.1% to $5.45 per bushel, while December wheat rose by a quarter cent to $12.69-¼ per bushel.

Argentina’s farm minister indicated on Friday that discussions with China regarding corn exports were underway, despite China’s current restrictions on importing Argentine corn due to limitations on genetically modified varieties.

A recent poll suggested that China is likely to increase its reliance on corn imports over the coming year, although opinions on the overall supply and demand balance vary.

In the wheat market, support has also been attributed to dry weather conditions affecting key U.S. winter crop regions, along with demand from Iraq. Iraq’s state grain board confirmed the purchase of 250,000 tonnes of wheat from the U.S., Australia, and Ukraine in its latest tender. This included 100,000 tonnes from the U.S. at $399.80 per tonne, 100,000 tonnes from Australia at $384.60 per tonne, and 50,000 tonnes from Ukraine at $370 per tonne.

Weather concerns in Australia, typically the world’s fourth largest wheat exporter, are also influencing the market. Continuous rain across eastern states is hampering the wheat harvest for the 2010/11 season, raising alarms about crop quality.

Although corn and wheat markets found some stability with renewed investor interest in riskier assets, worries about potential liquidity tightening by Beijing lingered, having unsettled markets previously.

On Friday, both corn and soybean prices hit daily trading limits, as investors exited positions across various markets—spanning crude oil to gold—in anticipation of potential interest rate hikes in China, the world’s second-largest economy.

A central bank researcher emphasized the need for China to adopt a more cautious monetary policy to mitigate risks linked to the loose monetary conditions previously employed to address the global financial crisis.

Additionally, reports indicated that China’s major state banks had exhausted their annual credit quotas for property developers, leading them to halt new loans for the remainder of the year.

Market Prices at 0442 GMT

• Wheat: 673.75, +0.67%, -4.30%
• Corn: 545.00, +2.06%, -3.37%
• Soybeans: 1269.25, +0.02%, -5.21%
• Rice: $13.87, -1.46%, -4.84%
• WTI Crude: $85.05, +0.20%, +0.20%

Currencies

• Euro to Dollar: $1.394, -0.16%

Note: Market data is reported in U.S. cents per bushel for wheat, corn, and soy, and in USD per hundredweight for rice.

(Editing by Clarence Fernandez)