May 9, 2011

 

CBOT corn falls to one-month low

 

 

CBOT corn fell to their lowest in over a month on Friday (May 6), while wheat and soy recovered with agricultural markets caught in the recent sell-off in world markets on mounting economic worry.

 

The corn market was also hit by lower-than-expected US exports in the week-ended April 28, although overall fundamentals were bullish on tight old-crop supplies and delay in spring planting.

 

"Yesterday's sell-out did not stop at agricultural commodities," said Commerzbank analysts."It looks like the baby is being thrown out with the bathwater, as the news situation on wheat and corn is still tense."

 

CBOT July corn slid 1.55% to US$6.97-3/4 a bushel by 1148 GMT, falling below US$7 for first time since March 31 and July wheat was flat at US$5.54-3/4 a bushel. Soy for July ticked 0.13% lower to US$13.20 a bushel.

 

"The fundamentals around grains and oilseeds complex have not changed, it is very bullish for corn in the near term," said Adam Davis, senior grains trader at Merrick Capital in Melbourne which invests in agricultural commodities.

 

"We still have the US growing season to go through, corn plantings so far have not been ideal and there is reasonable value at these levels," David said. On Thursday (May 5), July corn fell 2.8% and is set for a fall of more than 8% for the week.

 

High prices slowed US corn exports in the week ended April 28 to only 284,000 tonnes below expectations, further putting pressure on prices.

 

Yet delays in seeding the US corn crop and the tightest stocks since the 1930s helped to soften the blow by attracting short-covering and end-user buying in corn.

 

"After the large overnight movements, grains in Asian markets are still volatile and in line with a little movement down in the US dollar," said Garry Booth, a senior trader with MF Global Australia.

 

Funds began exiting grains last week, selling an estimated 55,000 corn contracts during April 27-28, spurred in part by talk that a large investment fund was liquidating some of its commodity holdings.

 

The market remains concerned about the state of the US winter wheat crop which has been hit by drought as well as dry weather in France and Germany.

 

After the market closed on Thursday (May 5), the Wheat Quality Council's annual tour of Kansas, the top US winter wheat grower, projected the state's winter wheat output at 256.7 million bushels, with an average yield of 37.4 bushels per acre. If realised, the wheat crop would be the smallest in Kansas since 1996.

 

Slow demand for US soy from China where crushers are balking at relatively high prices and large South American crops are pressuring soy's recovery. "US exports were very weak in the latest week," said Booth. Exports were just 21,000 tonnes, below market forecasts of 150,000 to 250,000 tonnes.