Chicago Board of Trade (CBOT) corn futures rose over one per cent, posting advances for the third straight session on Monday on tight stocks and on spillover from the rally that followed the bullish corn supply numbers the U.S. government released Friday, 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 for the third consecutive trading session 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 row-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.
CBOT May corn was up 7-3/4 cents per bushel at $7.11-1/4, May soybeans rose 9-1/2 cents to $14.80-1/2 and CBOT wheat for May delivery was up three cents at $7 (all figures US$).
CBOT new-crop December corn rose seven cents and new-crop November soybeans were up 1/2 cent.
In closely watched monthly supply/demand estimates on Friday, USDA kept corn ending stocks steady at 632 million bu., 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 per cent.
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.
The market for corn-based ethanol blending credits known as RINs (renewable identification numbers) surged to a new record on Monday in a market surge driven by fears of supply shortages and blending limits for alternative fuel.
Traders said RIN blending credits for 2013 were trading between $1.05 and $1.13 a gallon, up from roughly 74-80 cents a week ago and well up from the mid-20 cents at the end of January.
"Ethanol (RIN) is going crazy. These ethanol values (RINs), they are phenomenal," said Jeff Hove, who trades RINs for roughly 150 U.S. blenders through RINAlliance, an aggregator and trader of the ethanol credits.
The RBOB gasoline to ethanol spread was at 6.1 cents per gallon, premium gasoline, down 0.8 cent from Friday.
-- Sam Nelson covers the CBOT grain and oilseed futures markets for Reuters in Chicago. Additional reporting for Reuters by Carey Gillam in Kansas City, Gus Trompiz in Paris and Naveen Thukral in Singapore.