Traders focus on US weather in corn pollination season

Traders and analysts are keenly observing the corn pollination season in the US and any impact that the weather would have on yield this year following a USDA report last week.

 

"The final yield number is the big swing factor from here on out," Scott Briggs, agricultural commodities strategist with ANZ Banking Group, said in a research report.

 

Although rainfall through June was nearly double than usual, current forecasts are for dry weather over the next two weeks, Briggs said.

 

Analysts in Tokyo and Singapore echoed the same concerns as any unexpected weather conditions at this key season of the year would affect corn prices.

 

Some traders, however, are more optimistic. "At the moment, there is no severe drought or hot temperature so it's unlikely that the weather would turn any worse in the next two weeks before pollination ends," said a Tokyo-based trader at an international trading firm.

 

This means that prices may gain further. "Nearby corn prices may have more upside; prices may reach US$4 a bushel for the September contract, after which farmers are expected to start selling, putting downward pressure on the market," said the trader in Tokyo.

 

Prices are likely to move in a tight range thereafter, as fund buying in commodities is expected to be capped due to ongoing concerns about the global economic situation. The ongoing pollination also looks favourable amid favourable weather, the trader added.

 

US corn futures on the Chicago Board of Trade ended mostly lower Friday (Jul 2) in a modest correction following 12.5% gains Wednesday (Jun 30) and Thursday (Jul 1), with favourable weather adding pressure.

 

July CBOT corn ended down 1 1/2 cents to US$3.64/bushel and December corn closed down 3/4 cent to US$3.72 1/2.

 

Spot corn trading is likely to be subdued this week after sharp gains last week as buyers await further cues on price movement, said traders.

 

In other news, Singapore-based Indo-Sino Trade Pte. Ltd. offered the lowest prices in Bangladesh's tender to import 50,000 tonnes of wheat and 30,000 tonnes of non-basmati parboiled rice, a Bangladeshi government official said Monday (Jul 5).