Corn futures on the Chicago Board of Trade rose sharply early on Tuesday with March surging the 20 cent per bushel trading limit and up 5 percent to a 10-year high, traders said. At 10:08 am CST (1608 GMT), CBOT corn was up 1 to 20 cents per bushel, with March up 20 at $4.16-1/2 per bushel.
USDA on Friday shocked the market by releasing a 2006 US corn production number, which was below expectations and resulted in forecasts for a rapid drawdown of corn stocks by the end of this year as the demand for corn remained solid.
There was a big volume trade in the overnight electronic trading session with nearby corn contracts gaining 5 percent and moving above the $4.00 per bushel mark to a 10-year high and up the trading limit of 20 cents per bushel.
Volatility in the corn market prompted the CBOT to increase the initial margin to trade corn futures to $1,215 from the previous $1,013 effective with the close of business on Tuesday.
Crop weather remained satisfactory for corn production with plentiful precipitation in the US Midwest adding to soil moisture reserves and buoying prospects for a solid start for the soon-to-be-seeded US 2007 corn crop. And weather remained good over all in South America's corn and soybean belt. Cash basis bids in the Midwest late on Friday were flat to mostly lower amid active farmer selling following the rally in CBOT futures.
Exports were routine over the weekend. Early Tuesday, USDA said corn inspected for export last week totalled 33.4 million bushels below estimates for 37.0 million to 42.0 million bushels. Oat futures were unchanged to up 2 cents, with March unchanged at $2.72-1/4 per bushel.
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