U.S. grain futures surged Tuesday as projections for increased foreign demand fueled a recovery from steep losses last week.
Corn for July delivery, the front-month contract, climbed 39 3/4 cents, or 6.2%, to $6.80 1/2 a bushel. The contract wasn't subject to the typical 30-cent limit on gains at the Chicago Board of Trade. Corn for December delivery, the most actively-traded contract, rose 15 3/4 cents, or 2.6%, to $6.12 1/2 a bushel.
Soft red winter wheat futures also rebounded, with the July contract closing up 20 1/4 cents, or 5%, at $6.13 3/4 a bushel. Most-active September wheat jumped 23 1/4 cents, or 3.8%, to $6.35 1/2 a bushel.
Increased demand drove prices higher after corn last week sank to 3 1/2-month lows and wheat reached its lowest level in almost a year. The sell-offs were seen as buying opportunities by foreign importers in need of grain.
"You can only beat on [prices] for so long and then they have to show some signs of life," said Shawn McCambridge, senior grains analyst in Chicago for Prudential Bache, a brokerage firm.
Prices collapsed last week after the U.S. Department of Agriculture issued surprisingly high estimates for existing corn supplies and the number of acres farmers planted with corn. The estimates weighed heavily on corn and dragged wheat along for the ride, as both grains are used for animal feed.
Despite Tuesday's gains, the nearby corn contract remains well below its record high near $8 a bushel from early June. Prices have tumbled during the past several weeks on concerns a potential for a global economic slowdown could reduce demand for commodities.
China was thought to be one of the countries to take advantage of the latest sell-off. There was talk the Asian country booked 500,000 tons of corn after being the suspected buyer of 1.14 million tons last week. The USDA confirmed only that last week's deals were struck with "unknown destinations."
Foreign buyers were expected to step up purchases of wheat as prices became competitive with those from the Black Sea region, which is known for offering low-cost grain on the world market. It is a "natural time" to accelerate buying of wheat because harvest is progressing in the U.S., brining fresh supplies in from the fields, said Dale Durchholz, analyst for AgriVisor, an agricultural advisory firm in Illinois.
"I think we're going to start seeing business ramp up on the export side," he said.
Soybeans finished higher on spillover buying from the grains and lingering doubts about output. The market will remain trapped in a narrow trading range until some meaningful news emerges to provide some clear direction, analysts said. November soybeans rose 5 1/2 cents, or 0.4%, to $13.18 a bushel at the CBOT.
Oats for September delivery was unchanged at $3.47 a bushel, and ethanol for December delivery rose 1.8% to $2.253 per gallon. December soyoil ended down 0.2% at 56.21 cents a pound, and December soymeal lost 0.03% to $340.90 per short ton. September rice jumped 2.5% to $15.29 per hundredweight.