Bloomberg News

Wheat, Corn Gain on Speculation Lower Prices Lured Importers

July 05, 2011

July 5 (Bloomberg) -- Wheat and corn rose in Chicago on speculation this year’s lowest prices may have fueled demand from importers. Rice climbed to the highest level in almost six weeks.

Exporters in the U.S., the world’s largest corn grower and shipper, sold 1.14 million metric tons of the grain for unknown destinations, the Department of Agriculture said July 1. China may have been the buyer, researcher Grain.gov.cn said yesterday. Grains fell last week after the USDA raised estimates for national plantings and stockpiles.

“Plummeting grain prices last week have resulted in an increase in actual physical transactions,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said in a report today. “China is well-known as a price-conscious customer, and there are a number of signs that it was behind the major order placed last week.”

Wheat for September delivery gained 22.5 cents, or 3.7 percent, to $6.3475 a bushel by 12:04 p.m. London time on the Chicago Board of Trade. The grain touched $5.92, the lowest price for a most-active contract since July 2010, on July 1 and plunged 25 percent in five weeks before this week.

The soft-wheat harvest in France, the biggest European Union producer, may fall 9 percent to 32.5 million tons this year, farm adviser Offre et Demande Agricole said today. The U.K. crop will drop 4.2 percent to 13.8 million tons, it said.

Milling Wheat

Milling wheat for November delivery traded on NYSE Liffe in Paris advanced 4 euros, or 2.1 percent, to 197 euros ($285) a ton.

Corn for December delivery rose 11.75 cents, or 2 percent, to $6.085 a bushel in Chicago. Prices reached $5.755, the lowest level since December, on July 1 and slid 21 percent in six weeks before this week.

Soybeans for November delivery climbed 12 cents, or 0.9 percent, to $13.245 a bushel.

“On the whole, there is a fair amount of demand,” said William Adams, a fund manager at Resilience AG in Zurich.

Rice for September delivery gained 29 cents, or 1.9 percent, to $15.20 per 100 pounds, advancing for a third day. The grain reached $15.30, the highest level since May 25, and jumped 55 percent in the past year, more than wheat or soybeans.

Indonesia, the world’s third-largest rice grower, may have to import the grain for a second year to replenish stockpiles as government estimates show production growth will miss this year’s target, ministers said.

Southeast Asia’s biggest economy wants stockpiles at state food company Bulog to reach 2 million tons, up from 1.6 million tons at present, to manage local prices and for use in case of an emergency, Coordinating Minister for the Economy Hatta Rajasa said. Indonesia was a net-importer of rice in 2010 after being self-sufficient the prior two years.

The government has been trying to cool food inflation that helped drive consumer prices 5.4 percent higher last month from a year earlier.

--With assistance from Rudy Ruitenberg in Paris, Sungwoo Park in Seoul and Kateryna Choursina in Kiev. Editors: Dan Weeks, Claudia Carpenter.

To contact the reporters on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net; Tony C. Dreibus in London at tdreibus@bloomberg.net.

To contact the editors responsible for this story: James Poole at jpoole4@bloomberg.net


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