CHICAGO: US corn futures rose on Monday but held below a new record high posted overnight as traders bet on higher prices to preserve dwindling supplies in the United States, the top exporter of the feed grain.
The tightest US corn stocks since the 1930s lifted futures to a new high of $7.83-3/4 in overnight Globex trade.
A government report later in the day is expected to show that US farmers are off to their fastest start on record in seeding this year's corn crop.
Corn rose for the second day in a row, closing in on $8 per bushel and on track to post gains for five consecutive weeks after government reports showed that demand from exporters, feeders and ethanol makers remains robust despite record high prices.
"The fundamentals are still taking the lead on corn, the interest is still there to own corn," said Dax Wedemeyer, an analyst for US Commodities, Des Moines, Iowa.
Soybeans fell over 1 percent as the harvest of South America's bumper soy crop advanced, some buyers took profits, and traders worried over demand from China, the world's leading soybean importer.
"As for soy, news that China might cancel cargoes is the impetus behind lower prices," said Matt Pierce of GrainAnalyst.com.
POOR MARGINS IN CHINA
An official with China's state-owned trading house COFCO Co Ltd attributed a possible slowdown in soy imports to poor crushing margins. In addition, he said soy supplies are expected to be ample in the first half of the year.
US wheat turned firm, following the rally in corn, after moving lower in earlier dealings because of a sag in the high protein top-quality hard red winter wheat traded on the Kansas City Board of Trade.
Wheat was pressured by forecasts for showers over the next week in drought-plagued areas of the US Plains hard red winter wheat growing region, which could improve the condition of the developing wheat crop.
At 10:36 a.m. CDT (1536 GMT), CBOT May corn was up 4-1/2 cents per bushel at $7.72-1/2, May soy was down 24 cents at $13.68-1/4 and May wheat was up 1/2 cent at $7.98.
INVESTORS TO KEEP FOCUS ON CORN DEMAND
Traders said the corn market likely would remain on investors' radar until there are signs that demand is cooling off.
The United States is the world's largest grain exporter and runs the risk of depleting its corn suppplies before the autumn harvest unless demand is curbed.
There is a need for the 2011 US corn crop to be seeded in a timely manner to ensure an adequate supply for next year.
Wet weather in the Midwest is currently slowing spring field work but there is still plenty of time to plant the 2011 corn crop. The bulk of US corn plantings usually occur in late April and early May.
The May/December corn spread widened to a life of contract high $1.30-3/4 per bushel, premium May in early March and remained at a lofty $1.21 per bushel premium May on Monday.
The big premium for May is a reflection of the shrinking old-crop stocks and the outlooks for farmers to plant the second largest US corn area since 1944.
"The spread will remain wide unless we see some planting problems and December could then begin recovering against May, which would narrow the spread," Wedemeyer said.
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