February 19, 2010

 

US feed grains drop on higher dollar

 

 

Corn, wheat and soy futures declined after the Federal Reserve raised the discount rate for the first time in more than three years, boosting the dollar and potentially crimping overseas demand for US crop supplies.

 

Corn for May delivery fell as much as 1.1% to US$3.65 a bushel in after-hours electronic trading on the CBOT. The price also fell after the US, the world's biggest grower, raised estimates for corn planting.

 

The contract traded at US$3.66 a bushel at 2:21 p.m. Singapore time, taking losses to 1.9% this week. The dollar gained 0.5% against a basket of six major currencies including the yen and the euro.

 

Corn sowing will rise to 89 million acres (36 million hectares) this year from 86.5 million last year, Joe Glauber, chief economist at the USDA said.

 

The Federal's decision aided the dollar, hurting commodities priced in the US currency. The dollar gained to US$1.3462 per euro at 2:16 p.m. in Singapore from US$1.3527, after climbing to US$1.3444, the strongest since May 18.

 

Japan, the world's biggest corn importer, and South Korea, the third-largest, are switching to suppliers from Brazil and Argentina on concern that the quality of the US crop may have deteriorated after wet weather in the Midwest delayed harvesting in the North American nation's largest producing region.

 

Buyers in South Korea are worried that the US does not have enough capacity to dry up its crop, said Park Yong, the Chicago-based chief market analyst for CJ Corp., the nation's biggest food processor.

 

Japan's corn purchases from Brazil for shipment between January and June rose to at least 500,000 tonnes, more than 10 times the volume sought in 2009, while orders from Argentina reached 100,000 tonnes, close to the full-year shipments posted last year, Nobuyuki Chino, president of Unipac Grain Ltd. in Tokyo, said earlier.

 

Meanwhile, May-delivery wheat, which can be used to replace corn in animal feeds, fell 1.1% to US$4.94 a bushel at 2:53 p.m. Singapore time, taking losses to 1.5% this week.

 

Soy for delivery the same month lost as much as 1.7% to US$9.41 a bushel before trading at US$9.4775. Futures are headed for a 0.7% decline this week.

 

Argentina, the third-largest soy exporter, may exceed a forecast for a record harvest of 52 million tonnes as rains aid crops, the Buenos Aires Cereals Exchange said.