October 22, 2010

US corn futures fall on price rally

US corn futures fell Thursday, retreating on an export report that signalled a recent price rally is curbing demand, and on strength in the US dollar.

CBOT December corn ended 9 1/4 cents, or 1.6%, lower at US$5.64 1/4 a bushel. Speculative fund selling was estimated at 11,000 lots.

The impact of the surge in corn prices after the October 8 crop report was reflected in corn export sales of 212,500 tonnes falling short of analysts' forecasts for 650,000 to 950,000 tonnes.

Weekly corn sales for delivery in 2010-11 marketing year, which runs through Aug. 31, were down 77% from the previous week, and 72% from the prior four-week average, according to USDA. The top buyer was Japan at 144,900 tonnes.

The declines were a reversal from Wednesday trading when weakness in the US dollar pushed corn prices up 5%. The dollar stabilised Thursday, lowering expectations that currency weakness would attract additional export demand.

The bounce in the dollar produced general weakness across a range of commodities, including crude oil, which slipped 2% during grain futures trading. A firmer dollar makes US commodities more expensive for foreign buyers and reduces demand.

The December contract ended at US$5.64 1/4, up 1 1/4 cents for the week.

Futures are poised to hover within a 50-cent trading range until the Nov. 9 crop report unless new fundamental news emerges, analysts said. The market remains underpinned by expectations the USDA will further trim US output and supply forecasts in the November crop report.