US corn futures ended higher on Monday, but ran out of steam after setting a new March contract high and 29-month high at $6.19, traders said. Early support spilled over from the March soyabean contract, which hit a 27-1/2 month high amid ongoing concerns that hot and dry weather in Argentina would impact crops there.
While both the soyabean and corn crops could suffer from hot and dry weather in Argentina, the most immediate impact has been felt in soyabean futures. "The (corn) market could easily have gone higher," said Jack Scoville, an analyst with The Price Futures Group. He said Argentina's weather news should have been just as supportive for corn as it was for soyabeans.
Scoville suggested that an upside limit for corn may be that feed wheat prices have become more competitive. Excessive rains during the harvest in Australian turned a large percentage of the crop into feed wheat, which now is in ample supply, he said. Rainy weather and cooler temperatures over the weekend provided some relief to the Argentine corn crop but concerns remained about below-normal yearly rainfall.
Funds bought an estimated 4,000 contracts, sources said. However, overall futures volume was very thin, limited by the post-holiday lull and a severe snowstorm on the East Coast. USDA reported export inspections of US corn in the latest week at 32.561 million bushels, within trade estimates for 29 million to 34 million.
Seeking to control lending and money growth, China's central bank raised interest rates on Saturday for the second time in just over two months. While the timing of China's tightening was a surprise, the action was not, so had little lasting impact, analysts said. In other China-related news, China's parliament proposing legislation on management of genetically modified food, according to Xinhua.
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