May 3, 2010

US corn, soy futures drop as dollar strengthens

Corn, soy and wheat declined, reversing earlier gains, as the US dollar strengthened against a basket of six major currencies.

Corn for July delivery fell 0.5% to US$3.7325 a bushel at 1:47 p.m. Singapore time, reversing a 0.3% rise, as the strengthening US currency cut the appeal of crops priced in the dollar. July-delivery soybeans fell 0.3% to US$9.9575 a bushel.

Corn and soy earlier rose on speculation China's plans to buy US supplies may encourage purchases by overseas and domestic customers, and as rains in the US Midwest delayed planting.

According to analysts, corn will rise this week, while soy will gain. Rains will disrupt planting in the corn- and soy-growing areas in the Midwest, while cold weather in northeast China will delay planting of spring crops and may cause damage to newly-emerged crops.

Analysts said corn is continuing to draw support from the demand profile emanating from China, noting that the grain market is also supported by the weather forecast over the weekend, which may result in some replanting of corn and soybeans across parts of the US corn belt.

Strong thunderstorms will affect soy-, corn- and wheat- growing areas in the Midwest in the next few days, according to forecasts, while rains may cause localised flooding in the region. The Midwest is the country's largest corn and soy-growing region.

Meanwhile, China will auction 1.38 million tonnes of corn from state stockpiles this week, according to reports.

Sales from stockpiles by China, the world's second-largest consumer of corn, and reduced production may drain the nation's supplies, potentially pushing imports to as much as 500,000 tonnes. China bought 115,000 tonnes of corn from US exporters for delivery in the marketing year that ends August 31, the USDA said.

Wheat for July delivery fell 0.2% to US$5.02 a bushel at 1:39 p.m. Singapore time, after earlier gaining as much as 0.7% on speculation that investors are closing bets on falling prices.