US corn futures climbed for a second straight session on Monday as tight supplies of grain harvested last autumn and strong cash markets rallied the benchmark May contract more than 2 percent, the strongest gain in nearly three months. Wheat followed corn higher, adding more than 1 percent, while soyabeans fell for the first time in five sessions on spread activity, with traders buying corn and selling soyabeans.
Chinese feed mills were keen on importing US corn as domestic prices of the grain were at a steep premium to imports, although cash traders could not confirm that any fresh deals have been signed.
Talk of potential demand from China for US corn after rumours of a large sale on Friday were further fuelled by news that Argentina, the world's No 2 corn exporter, may restrict exports of the grain. "There's a lot of optimism about the corn sale to China that was rumoured on Friday and news that Argentina was going to possibly restrict corn exports made for a positive combination," said Alan Kluis, president of Kluis Commodities.
"The March contract goes off the board on Wednesday and somebody wants cash corn with the way the March went to a premium to May. Until the March corn breaks, the path of least resistance is higher," he said. Chicago Board of Trade March corn gained 17-1/2 cents, or 2.7 percent, to $6.71-1/2 per bushel. The actively traded May contract rose 14-1/2 cents, or 2.2 percent, to $6.59-1/2 in the strongest rally since December 19.
Commodity funds were net buyers of 13,000 corn contracts on the day, according to trade sources. The funds were also net buyers of 3,000 CBOT wheat contracts and net sellers of 3,000 soyabean contracts, they said. New-crop corn futures were held back by bull spreading due to expectations for a big jump in US seedings this spring that were expected to nearly double stocks of the grain from current forecasts for them shrinking to a 16-year low by the end of the summer.
Soyabean prices drifted lower after hitting 5-1/2 month highs last week, pressured by spread activity as traders unwound long soya-short corn positions. CBOT May soyabeans eased 3-1/4 cents, or 0.2 percent, to $13.34-1/2 a bushel while new-crop November was down 5-3/4 cents, or 0.4 percent, at $12.99-1/2. CBOT wheat for May delivery gained 8-1/4 cents, or 1.3 percent, to $6.51-1/4 a bushel, largely propelled by firmer corn.