The luck of the Irish befell traders who came in long corn this morning as grain prices exploded on the Chicago Board of Trade. And as further indication mounts that demand is swelling for US supplies, there could be no stopping another significant spike in corn prices.
Corn traded limit up this morning following recent days of downward pressure in the wake of natural disaster in Japan, the globe’s biggest buyer of corn. So much fear has permeated the markets since last week that traders and investors have been turning to options at a breakneck pace to help mitigate risk.
Action in options spiked this week as volatile markets are inspiring more and more investors to protect their investments during tremendous price swings. But on Thursday, there was only one direction for the price of most commodities – north.
US exporters reported corn sales doubled for the week ending March 10th. 116,000 metric tons were also sold to unknown destinations for delivery before September 1, the USDA says. It should be noted, however, that the report does not cover the period beginning last Friday – the day in which Japan was rocked by the earthquake and subsequent tsunami.
Corn is the largest US crop, valued at close to $67 billion last year.
Agritel, a European company that “advises more than 2,000 farmers on buying and selling their crops,” tells Bloomberg today that grain consumers “are taking advantage of falling prices by making purchases to cover their needs for the remainder of the 2010-11 season.”
“End-users snapped up purchases after values tumbled, which is helping prices,” Han Sung Min, a senior trader at Korea Exchange Bank Futures Co. tells Bloomberg. “The rebound may be short-lived because investors remain jittery, monitoring to what extent the disaster will impact the market.”
“From a fundamental view, the U.S. corn situation remains critical, with stocks expected to be at extremely low levels at the start of the season,” Agritel added. “All the more because ethanol production continues to show an ongoing vigor that adds to the fundamental tension in the market.”