U.S. market abuzz with talk of corn sales to Russia
CHICAGO (Reuters) - Chicago Board of Trade grain markets were buzzing on Friday with talk that Russia may be looking to make a rare purchase of U.S. corn, but analysts and cash sources were unable to confirm the rumors that helped send futures higher.
Grain markets have been on edge over likely Russian imports since the country's worst drought on record devastated its grain crop and triggered a grain export ban that will last at least until late next year.
Russia was widely expected to need imported grain this year to make up for a nearly 40 percent year-on-year drop in grain output.
The U.S. Agriculture Department projected Russia's corn imports in the October 2010-September 2011 marketing year at 1 million tonnes, which would be its largest corn import volume since 1993/94.
Traders expect most of that corn to come from regional suppliers such as Ukraine and Kazakhstan.
Dan Basse, grain analyst with AgResource Company, said there were rumors about Russia looking to buy U.S. corn but he could not get any confirmation from his industry sources.
"It will be far fetched that Russia is willing to buy U.S. corn when they can be buying from Ukraine and Kazakhstan at a lower price," Basse said.
Benchmark U.S. corn futures on the Chicago Board of Trade rallied 4.5 percent on Friday, largely due to a weaker U.S. dollar and worries about lower U.S. corn yields.
Some cash grain traders said that the Russia rumors added support, although many other traders said they had not heard the rumor as of Friday afternoon.
One U.S. export trader said Russia had already begun importing feed grains.
"Russia this week bought Ukrainian corn and barley, so they are starting their import program which is pretty shocking," said a U.S. trader, who was unable to confirm the volume of sales or further details.
Worries about Ukraine's ability of willingness to export large amounts of certain grains this year have fueled talk that Russia may have to ultimately look to U.S. corn.
The Ukrainian government assured European Bank for Reconstruction and Development officials on Friday that it will not restrict grain exports amid complaints that lengthy customs checks have curbed shipments.
"Everyone's been nervous that Ukraine would be coming out with an export ban. If that happens it would certainly get people pretty excited," the trader said.
Other traders said they had heard the rumors about Russian interest in U.S. corn, but were unable to confirm that any sales or purchase inquiries have occurred.
"I've heard the rumors, but I see absolutely no evidence of it." a U.S. corn export trader said.
"Ukraine still has an exportable surplus of corn that is valued in the $250 to $260 per tonne range, FOB Black Sea. That figure should translate to something that can get into Russia by truck or rail far cheaper that what would work out of the U.S.," he said.
Corn at the U.S. Gulf Coast was offered at about $240 per tonne for November-December shipment, but ocean freight could add at least another $40 to $50 to that price.
(Additional reporting by KT Arasu; Editing by David Gregorio)
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