July 16, 2009

US soy, corn futures hit by profit-taking, weather

US soy and corn futures declined Wednesday (July 15) on investor profit-taking and the weight of near-perfect weather in the US Midwest.

Soy and corn values were also weakened a bit by news that Tyson Foods Inc would eliminate more than 28 percent of its hog herd amid high feed prices and a slowdown in pork sales.

Sterling Smith, an analyst for Country Hedging Inc in Minnesota, said the Tyson news unnerved corn and soy market players after a rally early in the session sparked by strong equities and crude markets and a weak dollar.

Smith said the next move in the grains complex would depend to a degree on its performance overnight.

He added that soy may see a recovery bounce given the robust demand outlook for the commodity and tight nearby supplies.

The US Department of Agriculture (USDA) said on Wednesday (July 15) 113,000 tonnes of old-crop (2008-09) US soy had been sold to China.

US soy supplies for 2008-09 are forecast to fall to 110 million bushels, the lowest in more than three decades.

China is one of the world's biggest consumers of soy for its pig and livestock industry. It has turned to the US and Brazil, the world's No. 2 soy producer, after the bean crop in Argentina, the No. 3 producer, suffered from drought.

Another source of support for grains would be an extension of the strong performance of outside markets.

Chicago Board of Trade (CBOT) new-crop November soy futures dropped 13-1/2 cents to finish at US$9.04-1/2 a bushel. The old-crop August soy contract retreated 14 cents to close at US$10.20-1/2 a bushel.