GRAINS-U.S. corn up 2.9 percent, leads wheat and soy higher

Thu May 23, 2013 12:34am IST

* China deal, ethanol demand add to technical corn rally
    * Rains to slow U.S. corn seeding over the next week
    * July soybeans highest since October on 5th day of gains

 (Updates with closing prices, adds new analyst quote)
    By Mark Weinraub
    CHICAGO, May 22 (Reuters) - U.S. corn and wheat futures
rallied on Wednesday on a bargain-buying bounce after prices
fell to multiweek lows earlier this week, traders said.
    Soybean futures also rose, following the strength in grains,
with the front-month contract gaining 1.1 percent on speculative
buying, its fifth straight day of gains despite weakness in the
cash market.
    Chicago Board of Trade corn notched the biggest increase,
2.9 percent, receiving additional support from export sales to
China and signs of burgeoning ethanol demand. Prices for the
benchmark July contract broke through key resistance
points, such as its 50-day moving average.
    "All we are seeing here right now is a little bit of
technical recovery," said Karl Setzer, a commodity trading
adviser at MaxYield Cooperative in West Bend, Iowa.
    CBOT July corn futures settled up 18-1/2 cents at
$6.58-1/2 a bushel, while CBOT July wheat was 8 cents
higher at $6.88-1/2 a bushel.
    On Tuesday, CBOT corn hit its lowest price since April 8 on
a continuous basis, while wheat dropped to its lowest level
since April 3.
    CBOT July soybeans were up 16 cents at $14.94-1/4 a
bushel. The July contract peaked at $14.95, its highest since
Oct. 1.
    Private exporters reported the sale of 360,000 tonnes of
U.S. corn to China, the U.S. Agriculture Department said on
Wednesday morning. Another 180,000 tonnes was sold to an
unidentified buyer which traders said was likely China since it
is the only country that typically buys such large quantities at
one time.
    The U.S. Energy Information Administration said on Wednesday
that weekly U.S. ethanol output rose 18,000 barrels per day to
875,0000 barrels and stocks fell to 16.19 million barrels.
 
    "Getting those corn sales this morning to China basically
gave us a really good value level that says the world has an
appetite at these price levels," said Bill Gentry, a broker at
Risk Management Commodities in Lafayette, Indiana. "We got an
additional boost when we got the ethanol numbers."
    Lingering concerns about crop development this summer added
support to corn, even after U.S. farmers' most active planting
week ever allowed them to finish the bulk of their corn seeding.
USDA pegged corn planting at 71 percent complete as of Sunday,
up from 28 percent a week earlier. 
    Still, much of the corn was seeded after May 15. That raises
the risk of the crop pollinating this summer under the stress of
high temperatures, which could reduce yields.
    "The positive sowing figures do not mean that all is over
yet. And as we have seen in past years, a lot can still happen
to the U.S. corn crop," Commerzbank analyst Carsten Fritsch
said. "This worry is also helping to support corn prices today."
    Additionally, some rain showers could cause temporary delays
to the final planting push during the next 10 days.
    "Overall it looks like they'll make decent progress, more so
in the lower Midwest than in the Dakotas, though," said Andy
Karst, meteorologist for World Weather Inc.
    Rains were moving from the western Midwest into the east on
Wednesday. It will be drier Thursday and Friday, followed by
more showers by the weekend, Karst added.
 
 Prices at 1:50 p.m. CDT (1850 GMT)      
                              LAST      NET    PCT     YTD
                                        CHG    CHG     CHG
 CBOT corn                  658.50    18.50   2.9%    1.9%
 CBOT soy                  1494.25    16.00   1.1%   24.7%
 CBOT meal                  440.60     2.30   0.5%   42.4%
 CBOT soyoil                 49.64     0.16   0.3%   -4.7%
 CBOT wheat                 688.50     9.50   1.4%    5.5%
 CBOT rice                 1534.00    16.00   1.1%    5.0%
 EU wheat                   205.75     1.75   0.9%    1.6%
 
 US crude                    94.22    -1.96  -2.0%   -4.7%
 Dow Jones                  15,354      -34  -0.2%   25.7%
 Gold                      1360.26   -15.18  -1.1%  -13.0%
 Euro/dollar                1.2835   -0.007  -0.5%   -0.8%
 Dollar Index              84.3460   0.4820   0.6%    5.2%
 Baltic Freight                829       -1  -0.1%  -52.3%
 
In U.S. cents, benchmark contracts, except EU wheat (euros) and
soymeal (dollars). CBOT wheat, corn and soybeans per bushel,
rice per hundredweight, soymeal per ton and soyoil per lb. 

 (Additional reporting by Sam Nelson in Chicago and Michael
Hogan in Hamburg; editing by Jim Marshall and John Wallace)
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