GRAINS-Corn up for 3rd day on tight stocks; firm cash lifts soy

Mon Mar 11, 2013 1:14pm EDT

(Updates prices, adds new analyst quotes)
    By Sam Nelson
    CHICAGO, March 11 (Reuters) - Chicago Board of Trade (CBOT)
corn futures rose for the third straight session on Monday on
tight stocks and on follow-through from the rally that followed
the bullish corn supply numbers released Friday by the U.S.
government, traders said.
    "Corn is leading everything higher today and it's technical
support after the USDA report. Managed money is buying after the
aggressive fund liquidation that we've seen," said Shawn
McCambridge, an analyst for Jefferies Bache.
    The U.S. Department of Agriculture's March supply/demand
report on Friday kept projected corn stocks unchanged at a
17-year low. The market had expected higher inventories.
    "Corn was up from USDA's report Friday; that is being
questioned by some, but it's all we have to work with for now,"
said Rich Nelson, director of research for Illinois-based
analytical firm Allendale Inc.
    Wheat turned up on spillover buying from strong gains in
corn futures. Soybean also rose for the third day in a row on
firm cash soy, slow farmer selling and slow shipments from the
2013 South American harvest.
    Traders were beginning to shift some attention to the
distant, or new-crop futures contracts, which were higher but
lagged gains in the old-crop or nearby futures contracts.
    "The improving weather I think is limiting gains as well,"
Nelson said.
    Agricultural meteorologist John Dee of Global Weather
Monitoring said additional drought-relieving rain fell over the
weekend across a broad swath of the U.S. crop region.
 
    The U.S. winter wheat crop is near its early growth stage
and U.S. farmers soon will be planting the 2013 U.S. corn and
soybeans.
    The U.S. crop belt is slowly emerging from the worst drought
in more than 50 years, which trimmed production. 
    At 11:45 a.m. CDT (1645 GMT), CBOT May corn was up 8
cents per bushel at $7.11-1/2, May soybeans rose 2-1/2
cents to $14.73-1/2 and CBOT wheat for May delivery was up
4-1/2 cents at $7.01-1/2.
    CBOT new-crop December corn rose 6-3/4 cents and
new-crop November soybeans were down 1/4 cent at
$12.68-1/4 per bushel.
    "Today, contrary to the weeks before, traders will pay more
attention to corn than wheat," said Arnaud Saulais of Starsupply
Commodity Brokers in Geneva.
    "The most surprising aspect of the USDA report was an
increase in the forecast for the amount of U.S. corn that will
be used for feed. The adjustment looked bullish as U.S. corn
stocks remained unchanged against higher stocks estimated by
analysts."
    In closely watched monthly supply/demand estimates on
Friday, the USDA kept corn ending stocks steady at 632 million
bushels, the smallest in 17 years and a bare three-week supply.
Analysts polled by Reuters had expected it to increase its
estimate for corn inventories 1.7 percent. 
    The increase in forecasted use of U.S. corn in animal feed,
which offset a cut in export demand, surprised operators who had
anticipated low-priced wheat would take some feed demand away
from corn.
    The USDA said the bump in corn feed demand came from a
continued expansion in poultry production and a reduction in the
projected feed and residual use of sorghum, another livestock
feed.
    However, analysts said overall adjustments in the USDA's
monthly report were not dramatic and that they would wait for   
 the department's quarterly U.S. stocks report later this month
for clearer supply/demand indications.
    "With this hurdle (the monthly USDA report) cleared, we
expect higher old-crop corn prices in the weeks ahead as the
market positions ahead of the March 28 Grain Stocks report,"
Morgan Stanley analysts said in a note.
    
 Prices at 11:48 a.m. CST (1648 GMT)                                       
 
                              LAST      NET    PCT     YTD
                                        CHG    CHG     CHG
 CBOT corn                  732.50     7.25   1.0%   13.3%
 CBOT soy                  1512.00     3.50   0.2%   26.2%
 CBOT meal                  436.40     0.30   0.1%   41.0%
 CBOT soyoil                 50.50     0.34   0.7%   -3.1%
 CBOT wheat                 697.25     7.25   1.1%    6.8%
 
 EU wheat                   236.50     2.50   1.1%   16.8%
 
 US crude                    91.42    -0.53  -0.6%   -7.5%
 Dow Jones                  14,425       28   0.2%   18.1%
 Gold                      1578.80     1.06   0.1%    1.0%
 Euro/dollar                1.3012   0.0007   0.1%    0.5%
 Dollar Index              82.7070   0.0110   0.0%    3.2%
 Baltic Freight                847        4   0.5%  -51.3%
 
 (Additional reporting by Gus Trompiz in Paris and Naveen
Thukral in Singapore; Editing by Bob Burgdorfer)