July 21, 2010

 

US corn futures fall as rain outlook eases yield concerns

 

 

Corn futures fell in Chicago, extending the biggest drop in seven weeks as a forecast for rain in parts of the US eased concern that dry weather will cause yield losses in the world's largest grower.

 

December-delivery corn slid 1.5% to US$3.8825 a bushel on the CBOT at 2:14 p.m. Paris time. The contract earlier lost 3.3%, the most since May 28. Wheat also declined.

 

Prices were weighed down by forecasts of rain for US crops and expectations of excellent US crop conditions, analysts said.

 

Illinois is the second-largest US soy and corn producer, and with Indiana, Ohio and Michigan accounted for 30% of the nation's last harvest of both crops, according to a January report from the USDA. About 72% of the US corn crop was in good to excellent conditions as of July 18, compared with 73% a week earlier and 71% a year ago, the USDA said.

 

China, the second-largest corn consumer, sold 244,500 tonnes of the grain from state stockpiles in Inner Mongolia, 250,600 tonnes in Jilin province and another 98,100 tonnes in Liaoning province, analysts said.

 

Meanwhile, September-delivery wheat dropped 1% to US$5.7625 a bushel. The grain's 14-day relative strength index, a gauge of whether a commodity is overbought or oversold, has mostly been above 70 since July 7, a level some traders view as a signal that prices are poised to decline.

 

Analysts said steep losses in corn prices and a correction from a recent rally weighed on prices, but news remains mostly supportive of prices, including an expanding drought in Russia and Kazakhstan and exports from the US.

 

Milling wheat for November delivery fell 1.3% to EUR165.75 (US$213.25) a tonne on NYSE Liffe in Paris.

 

Also, Ukraine will export 16 million tonnes of grain this year, less than a previous estimate of about 20 million tonnes, Agriculture Minister Mykola Prysyazhnyuk said.

 

Russia, the world's third-largest wheat grower in the 2009-10 season, may reduce grain exports should crop losses caused by drought deepen, Arkady Zlochevsky, president of the national Grain Union, said.

 

Rain in Canada last week added to excessive soil moisture in the nation's main growing regions, the Canadian Wheat Board said. Canada was ranked the second-largest wheat exporter in the 2009-10 season by the USDA.

 

The area in Canada seeded with wheat fell 7.1% to 22.7 million acres from a year earlier as wet weather kept farmers out of fields, Statistics Canada said in June. A survey due in August may show flooding caused further cuts, it said.

 

Soy for November delivery retreated 0.5% to US$9.6675 a bushel in Chicago.