Corn Will Jump 9% in First Quarter of 2011 on Asian Demand, Rabobank Says
July 14 (Bloomberg) -- Alexander Bos, a commodity analyst at Macquarie Group Ltd., talks about the effect of a drought on Russian wheat exports and the ability of the U.S. to benefit from any slump. Bos also discusses the outlook for livestock, soybean and corn prices. He speaks with Maryam Nemazee on Bloomberg Television's "The Pulse." (Source: Bloomberg)
Corn prices will average about 9 percent more in the first three months of 2011 than they have since July 1 because smaller crops in Europe, Russia and Ukraine will boost demand for U.S. exports to Asia, according to Rabobank Group.
The price will average $4.25 a bushel on the Chicago Board of Trade in the three months ending March 31, said Luke Chandler, Rabobank’s executive director of agricultural market research. The price averaged about $3.91 this month at the close of trading yesterday.
“We have turned bullish on prices” because of the drop in world grain production, Chandler said yesterday during an interview in Chicago. “We could see additional feed-grain demand moving back to U.S. corn” to avoid the risk of additional output losses in Europe and the Black Sea region, Chandler said.
Demand will increase just as yields drop in the U.S., where crops got too much rain this year, Chandler said. The U.S. is the world’s largest grower and exporter.
The average yield in U.S. may fall to 162 bushels an acre, less than the 163.5 bushels forecast earlier this month by the U.S. Department of Agriculture and a record yield of 164.7 bushels last year, he said.
“Yield estimates will become increasingly important to determine the amount of corn that can be used to meet demand,” Chandler said. “The U.S. supply already looks tight” with the USDA using an above-average yield forecast, he said.
Corn also may rise because U.S. supplies are cheaper for importers in China, Chandler said. Corn futures on the Dalian Commodity Exchange have risen 4.1 percent this year compared with an 8.9 percent drop in Chicago futures. Dalian corn is trading at a $3.46 premium to Chicago futures. China’s expanding economy is boosting demand for meat, milk and eggs, as rising incomes allow people to buy more food.
“China prices are relatively high compared to the U.S.,” Chandler said. “Exports are on the increase.”
To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net
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