US corn and wheat futures slip on strong dollar; soy rise

 

 

US corn and wheat futures dipped on Thursday (May 20) as the dollar remained strong, but soybeans rose as tight supplies and talk of more Chinese buying helped them rebound from two-month lows.

 

Hopes for more Chinese deals also continued to underpin corn prices, traders said, with some attributing Thursday's weakness to some market players locking in profits after the confirmation of two new shipments to China.

 

China's state-owned COFCO Co. Ltd. bought another two cargoes of US corn this week, adding its total purchases from the world's largest exporter to about half a million tonnes, according to company officials.

 

The USDA said on Wednesday that private exporters had reported the sale of 124,000 tonnes of US corn to unknown destinations for delivery during the 2009-10 marketing year. Traders said the sale was for China.

 

Analysts said corn continues to garner support from talk that Chinese import business has been concluded in last couple of days, noting that there were discussions that they are going to remain in the market for a year or so, now that is something supportive for prices.

 

But for now, corn handed back some of the gains made since the start of the week, still weighed by the prospect of the dollar rising further against the euro as uncertainty over unity in the euro zone kept the selling pressure on the single currency.

 

Germany's warning that the euro is facing a challenge, and a ban announced late on Tuesday on naked short selling, sent the euro to its lowest in four years. Strength in the dollar makes commodities priced in the US unit more expensive for holders of other currencies.

 

CBOT July delivery corn was down 0.4% at US$3.58 a bushel by 1130 GMT, CBOT July wheat fell 0.5% to US$4.67 a bushel, but soy for July gained 0.2% to $9.40 a bushel.

 

In the soy market, support came from tight supplies at processors and elevators around the US Midwest, which lifted the cash market.

 

Soy basis bids continued to rise at US Midwest processors. Many producers have sold portions of their crops at prices higher than current cash levels and are waiting for futures to rebound before selling more.

 

Additional support for the soy market stemmed from talk of Chinese buyers cancelling purchases of South American soy and replacing them with US supplies.

 

In Europe, Euronext milling wheat futures were 0.5% higher at EUR142.25 a tonne by 1125 GMT as dry weather in northern France threatened the development of new crop.