June 15, 2011

 

CBOT corn, soy futures decline as favorable weather may boost US crops

 

 

CBOT corn fell to a one-month low and soy declined on forecasts that favorable weather will boost yields in the US, the world's biggest grower and exporter.

 

About 69% of the corn crop was in good or excellent condition on June 12, up from 67% a week earlier, the USDA said yesterday. An estimated 87% of soy was planted, compared with the average of 89% in the previous five years.

 

"The markets are focused on rapid planting progress and improving crop conditions," said Nate Smith, a broker at the Linn Group in Chicago. Warmer weather and some rain is forecast for next week, "and that will maintain favorable growing conditions," he said.

 

Corn futures for December delivery fell 19.5 cents, or 2.8%, to close at US$6.85 a bushel at CBOT. Earlier, the price touched US$6.7475, the lowest for the most-active contract since May 12.

 

On June 9, December futures reached US$7.2275, an all-time high for the contract. On June 10, the price for July delivery, the most-active by open interest at the time, rose to a record US$7.9975.

 

Soy futures for November delivery fell 13 cents, or 0.9%, to US$13.6375 a bushel, the contract's fourth straight decline. The USDA said last week that reserves before the next harvest will rise as export demand ebbs.

 

China's central bank ordered lenders to set aside more cash in reserves as inflation accelerated to the fastest pace since July 2008. The country is the leading importer of soy, and is the biggest consumer of corn behind the US.

 

"Rising inflation in China may lead to interest-rate hikes and reduce speculative buying interest," Smith said. "The markets are watching for clues about money flows from investors."

 

Corn is the biggest US crop, valued at US$66.7 billion in 2010, followed by soy at US$38.9 billion, government figures showed.

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