May 6, 2011

CBOT grain futures slump on bearish outside market

CBOT grain futures endured another session of heavy losses on Thursday (May 5), as aggressive fund selling across the US commodities markets, which started earlier this week showed no signs of abating.

The most active corn contract for July delivery trimmed 20.75 cents, or 2.8%, to close at US$7.0875 per bushel. July wheat dropped 18 cents, or 2.3%, to US$7.54 per bushel. July soy plunged 30.25 cents, or 2.2%, to US$13.2175 per bushel.

Traders said that the continued sell-off in silver, gold, crude oil, and other commodity markets, and a strong rally in the greenback had helped to trigger another round of aggressive selling from fund traders in the grain market.

Weekly export sales for corn totalled only 284,200 tonnes for the current marketing year, which was much lower than trade expectation and the lowest level since October, according to the USDA.

Traders also said that although corn prices gained some support from concerns over tightening US corn supplies and delayed planting for the new corn crop, the negative impact from the outside market as well as the downbeat export demand for US crops both heavily weighed on the market, pushing the CBOT July contract to the lowest level since the end of March.

As for the wheat market, last week's export sales for wheat totaled 549,600 tonnes, which was well above trade expectations.

A trader pointed out that besides the negative impact from outside market, speculations that the delayed planting of corn and wheat could result in an acre increase for soy had also helped to drag down the prices of soy.