U.S. grains: Corn soars on bargain buying

CBOT March 2020 corn with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. corn futures jumped 3.7 per cent on Friday, more than recovering from the prior day’s 3.1 per cent drop, buoyed by a mix of short-covering and expectations of increased export demand for U.S. supplies, traders and analysts said.

Wheat and soybeans followed the firm trend.

Chicago Board of Trade March corn rose 13-3/4 cents, its biggest single-day move since October, to settle at $3.89-1/4 per bushel (all figures US$). CBOT March wheat ended up 5-1/4 cents at $5.70-1/2 a bushel and March soybeans rose 5-3/4 cents to finish at $9.29-3/4.

Corn futures rebounded a day after the March contract fell to a one-month low as doubts about the scale of Chinese purchases of U.S. crops under the trade agreement signed in Washington this week triggered a round of selling.

The mood changed on Friday as the price break inspired fresh interest from bargain-hunters that could include exporters, speculators holding short positions and domestic users such as cattle and hog feeders.

“It definitely looks like bargain-buying going on. The funds supposedly have bought like 15,000 (CBOT corn futures) contracts,” said Jack Scoville, analyst with the Price Futures Group in Chicago, who added that farmer corn offerings were thin.

“There is no real selling. The producer is pissed off after (the sell-off) yesterday,” Scoville said.

U.S. corn is competitive globally, analysts said, and a South Korean feed association bought about 66,000 tonnes of optional-origin corn overnight.

Traders continued to mull the implications of this week’s U.S.-China trade pact. In the long-anticipated conclusion of a Phase One trade deal with Washington on Wednesday, Beijing committed to increase purchases of U.S. farm products by $32 billion over two years.

However, China’s pledge to buy U.S. agricultural goods based on “market conditions” fueled skepticism that the targets could be met.

“Some people are just trying to work in this idea that China will resume buying U.S. commodities that they have not really been focused on for a while,” said Terry Reilly, senior analyst with Futures International in Chicago.

Wheat futures rose after easing in the previous session, remaining within sight of Wednesday’s near 17-month peak that reflected strong international demand and rising global cash prices.

A run of global purchase tenders this week underscored a backdrop of brisk overseas demand for wheat, helping keep export prices firm in the Black Sea region and Western Europe.

Reporting for Reuters by Julie Ingwersen in Chicago; additional reporting by Gus Trompiz in Paris and Colin Packham in Sydney.

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