Corn Prices Rally on Speculation, China Increase Import from US

Corn prices extended rallies to the highest prices on speculation that China may boost purchases from the America, the biggest producer of corn crops.

Jilin Corn Center Wholesale Market reported yesterday that government purchases of domestic grain have plunged this year to 1.2 million metric tons from 11 million a year earlier, a sign of tighter supplies in China that will lead to a jump in imports. On the Dalian Commodity Exchange, corn futures jumped to a record today.

“The rising markets are a reflection of traders expecting increased Chinese purchases from the U.S.,” Jerry Gidel, the chief feed analyst at Chicago-based Rice Dairy LLC, said in a telephone interview. “Rising meat demand is driving Chinese consumption of feed.”

Corn futures for May delivery rose 0.6 percent to close at $6.73 a bushel at 1:15 p.m. in Chicago, after touching $6.7375, the highest price since Sept. 22. The grain rallied 4.3 percent this week, the largest gain since the end of January. Corn futures for May delivery rose 0.4 percent to $6.715 a bushel on the CBOT, heading for the biggest weekly gain since January. Earlier, the contract touched $6.7375, the highest since Sept. 22.

Corn may rally next week as unusually warm, dry weather and drought conditions in parts of the northwestern Midwest may threaten this year’s crops and encourage farmers to withhold supplies left from last year’s harvest, Tim Hannagan, a grain analyst for PFT Best Inc. in Chicago, said in a telephone interview.

The average premium for corn at export terminals near New Orleans has climbed 30 percent in the past year, government data show. U.S. inventories before this year’s harvest are expected to drop to the lowest since 1996, the Department of Agriculture said March 9. Soybean premiums are 4.2 percent higher than a year earlier.

Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show.