SINGAPORE: Chicago corn jumped more than 1 percent on Tuesday, while wheat climbed nearly 2 percent on strong physical demand and improved global risk appetite following last week's selloff that was prompted by prospects of higher US supplies.
China's corn purchases last week, South Korean mill tenders on Tuesday and hopes of more Asian demand after a near 20 percent drop in prices from a record high in the past month of around $8 a bushel supported the grain markets.
U.S. agricultural markets were also underpinned by improved global risk appetite after Greece avoided an early debt default and data pointed to a moderate slowdown in China's growth.
"European shares rose for the sixth straight day on Monday and jitters about Greece continued to ease," Commonwealth Bank of Australia said in a report.
"European wheat prices climbed higher overnight, supported by thoughts that the June price slump was overdone and will uncover solid physical demand."
US markets were shut on Monday for a national holiday.
Chicago Board of Trade new-crop December corn was up 1.1 percent to $6.03 a bushel by 0324 GMT, while September wheat gained 1.9 percent to $6.24 a bushel. Soybean futures extended gains, with the November contract rising 0.6 percent to $13.20 a bushel.
SOUTH KOREAN TENDERS
Asian feed makers were in the market for more purchases.
South Korea's largest feedmaker Nonghyup Feed is seeking a up to 190,000 tonnes of U.S. No.3 or better corn for feed, while Major Feedmill Group is seeking up to 160,000 tonnes.
"I guess corn is actually oversold, we can see bargain hunters coming in and there is likely to be some commercial buying from feed millers," said Lynette Tan, an analyst with Phillip Futures in Singapore.
"Usually, we see China coming to buy when prices are low. We expect them to import more."
China purchased as much as 1.6 million tonnes of new-crop U.S. corn in recent dealings, taking advantage of the steep price drop to replenish its reserves.
The U.S. Department of Agriculture (USDA) on Friday announced the sale of 1.14 million tonnes of U.S. corn to unspecified buyers, but traders said it effectively confirmed rumors the past two weeks that China had bought a large quantity of corn from the United States.
USDA acreage and quarterly grain stocks data on Thursday triggered a record fall in CBOT corn futures, with the July contract, trading without the encumbrance of daily limits, falling as much as 83 cents, or about 12 percent.
With the likelihood of a record-large U.S. corn crop this year and stocks suddenly not as tight as previously feared, demand will be key in keeping prices from drifting lower.
Front-month corn fell 16 percent in June, while wheat lost 25 percent.
Investment bank Goldman Sachs last week lowered its three-, six- and 12-month price forecasts for corn, soybeans and wheat, citing a bearish USDA report on stocks and planting areas.
Goldman cut its three-month price forecast for corn to $5.90 per bushel, from $8 previously. It cut its six-month forecast to $5.75, from $7.80, and its 12-month forecast to $5.70, from $7.00.
It also lowered its three-month price forecast for soybeans to $13 per bushel, from $14, and its three-month forecast for wheat to $5.90 a bushel, from $8.
Some analysts however are skeptical of USDA's latest forecast which put the corn stockpile at 3.67 billion bushels on June 1 and pegged plantings at 92.28 million acres. Both figures were well above analyst expectations.
Copyright Reuters, 2011
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