U.S. corn farmers step up sales as CBOT futures surge

Source: By Michael Hirtzer, Reuters • Posted: Monday, June 12, 2017

U.S. corn futures surged to the highest levels in nearly a year on Thursday, and farmers were pressing the sell button.

Many growers who were finished planting the corn they will harvest this autumn took advantage of steep gains to sell supplies remaining from last year.

Massive global corn stockpiles kept prices below the cost of production for much of this year for many growers while stubborn farmers holding on to their grain squeezed profit margins for processors that turn corn into feed and the biofuel ethanol.

Kirk Leifer, who grows corn in southern Illinois, said he sold about 10 percent of last year’s harvest this week when futures hit $3.87 and $3.90 per bushel.

“It’s a good bit above our break-even and we’re making some money,” Leifer said, adding he held off on sales for months as futures traded in a relatively narrow range.

Chicago Board of Trade corn futures hit $3.91-3/4 per bushel, the highest level since June 28, 2016, before settling 1 cent higher at $3.85-3/4. That is up from corn’s roughly seven-year low of $3.01 reached last August.

Corn futures trading volume surged to a record 1.091 million contracts on Wednesday and Thursday’s volume was estimated at a robust 776,442 contracts, according to the CME Group. [CBOT/VOL] [VOL/CBOT]

Volumes soared as commercial grain handlers sold futures to hedge new long positions in physical supplies while speculative investors were buying back earlier short bets on worries that hot temperatures forecast later this week could stress young corn plants in the Midwestern crop belt, traders said.

“We wrote more ticket orders yesterday than we wrote in the entire month of May … And sales are still heavy today,” Diana Klemme, a broker at Grain Services Corp, said by phone.

Klemme said ethanol plants and corn rail shippers slashed bids to buy from farmers, reflecting the increased sales. Some corn end users now have bought enough corn to last through July, potentially limiting further gains in prices.

The U.S. Department of Agriculture will update U.S. corn stockpile totals on June 30. U.S. corn supplies as of March 1 were a record 8.616 billion bushels, up from 7.822 billion in 2016, USDA said.