July 21, 2010

Favourable weather forecast pressures US wheat and corn prices

US wheat and corn prices face pressure amid favourable weather forecasts, as investors now expect a better harvest.

Soy rose as inventories tightened. New crops are not expected to be harvested for another 40-50 days, analysts said.

Corn for September delivery slid 7.5 cents, or 2%, to settle at US$3.74 a bushel, while September wheat fell 5.25 cents to US$5.77 bushel. December-delivery corn added 0.3% US$3.885 a bushel at 2:23 p.m. Singapore time after swinging between gains and losses. Dry weather in recent weeks had some investors betting on a weak harvest, but new forecasts point to cooler, wetter conditions.

Wheat futures fell for a fourth straight session, the longest losing streak in six weeks, on speculation that prices had gained too fast on concerns that a drought in Russia may cut supplies.

September-delivery grain lost as much as 0.5% to US$5.74 a bushel on the CBOT and was at US$5.745 at 2:22 p.m. Singapore time. The last time the most-active contract declined for at least four straight days was in the period to June 7.

Futures rallied 24% in the first half of the month on concern that drought in Russia will curb global supply. The country was the third-largest grower in the 2009-10 season, according to the USDA. Trading volume earlier was 61% less than on July 15, when futures rose to an eight-month high.

Meanwhile, soy for August delivery climbed 3.75 cents to settle at US$10.1175 a bushel. November soy, meanwhile, dropped 35 cents, or 3.5%, to US$9.73.