July 19, 2010

 

US corn futures decline as speculators, farmers lock in gains

 

 

Corn futures slumped, snapping three days of gains, as some speculators and farmers locked in profits on speculation favourable weather in the US and China may boost output.

 

December-delivery futures declined as much as 3% to US$3.9525 a bushel, the biggest intraday drop for the most-active contract since May 28. Corn was at US$4.03 on the CBOT at 2:15 p.m. Singapore time. Futures rose 5.2% in the three sessions through July 16.

 

Corn and soy crop conditions in parts of the North China Plain may improve as rains and lower temperatures were forecast over the weekend and this week, while the eastern part of the US Midwest will have light, sporadic showers over the next few days, according to reports.

 

China is the second-largest corn consumer and the biggest soy buyer, while the Midwest is the largest US corn and soy growing region. Forecasts for rainfall in the US Midwest and China will boost the crop outlook, pushing some speculators to close long positions or bets on price gains, analysts said.

 

Hedge-fund managers and other large speculators increased their net-long position in Chicago corn futures by 77,256 contracts or 105% in the week ended July 13, from a week ago according to US Commodity Futures Trading Commission data.

 

Speculative long positions outnumbered short positions by 150,573 contracts on the CBOT, analysts said.

 

Meanwhile, corn and soy crops in the US, the biggest grower and exporter, are in good or excellent condition and may produce above-average yields this year, according to a survey of five Midwest states by SGS SA released July 16.

 

Wheat for September delivery gained as much as 1.8% to US$5.9775 a bushel, recouping the loss posted in the previous session, on lingering concerns dry weather in Russia and growing areas in Europe may pare global supply. The contract traded at US$5.95 a bushel, up 1.3% at 1:50 p.m. Singapore time.

 

Also, Turkey will harvest 15% less wheat than the 20-million-tonne forecast in 2010-11 season because of rains and flash floods this spring, said Ugur Kaleli, head of the trade bourse in Turkey's breadbasket of Konya.

 

Turkey is the largest wheat grower in the Middle East, according to the USDA.

 

Bangladesh is seeking to buy 50,000 tonnes of wheat from any exporting country except Israel, and suppliers have until July 29 to submit bids, according to a notice dated July 15 from the Directorate General of Food.

 

Still, the most-active contract may drop to US$4.94 a bushel by December 31 as prospects for the second-biggest wheat stockpiles in almost a decade overwhelm a damage caused by drought, according to reports.

 

November-delivery soy fell for a second day, losing as much as 1.3% to US$9.7225 a bushel before trading little changed at US$9.845 in Chicago.