June 30, 2010

US corn futures set for biggest monthly drop since March

CBOT corn futures headed for the biggest monthly decline in three months as planting advances in the US, the world's largest exporter, boosting expectations that the next harvest may exceed last year's record.

Corn futures for December delivery gained 0.4% at US$3.4525 a bushel on the CBOT at 11:15 a.m. Singapore time today (June 30), set for an 8.8% decline this month. That will be the biggest monthly loss since March. The most active contract is little changed for the three months ended today (June 30), after declining for six of the last seven quarters.

US farmers will sow 89.252 million acres (36.119 million hectares) with corn, according to the average estimate of 14 analysts in a Bloomberg survey. That is 0.5% more than farmers said they intended to plant in March and up 3.2% from 86.482 million acres in 2009. The USDA will update its crop acreage estimates in Washington today (June 30).

"What the market is paying attention to is the improving crop conditions in America, the weather forecast which is favourable," Luke Mathews, a commodity strategist at Commonwealth Bank of Australia said today (June 30). "That's likely to weigh on both commodities," he said, referring to corn and soy.

The USDA kept its estimate on the nation's corn production unchanged at 13.37 billion bushels in the year beginning September, with 88.8 million acres planted, beating last harvest's record of 13.11 billion bushels.

Soy futures for November delivery were little changed at US$9.13 a bushel at 12:23 p.m. Singapore time. The most active contract is set for a 2.6% decline this quarter.

The area planted with soy will total 78.161 million acres, up from 78.1 million forecast in March and a 0.9% increase from last year's 77.451 million, according to the survey. Farmers are wrapping up planting of the soy crop after wet weather delayed seeding. Corn and spring-wheat seeding were completed earlier this month.

Soy imports by China, the world's biggest buyer, may be more than 50 million tonnes next year, driven by rising wealth as rural inhabitants move into cities, Phillip Laney, China country director for the US Soy Export Council said yesterday (June 29). That is more than the 49 million tonnes estimated by the USDA on June 10.

Wheat for September delivery was little changed at US$4.575 a bushel, taking the loss for the most-active contract to 1.4% this quarter.

The wheat inventory in the US, the world's largest shipper, may be 940 million bushels on June 1, before this year's harvest, 41% more than the 667 million bushels a year earlier, according to the survey.