July 14, 2010

US wheat gains help lift corn futures

Gains in wheat futures helped temporarily lift corn on the CBOT after prices sagged early following a government report showing that the corn condition had improved.

CBOT wheat futures rallied on Tuesday (July 13), notching a six-month high in a wave of technical buying supported by stronger outside markets.

However, corn ended the day lower hitting the lowest point in the last four sessions under pressured from expectations for a large US crop. A weaker dollar and gains in equities helped fuel short-covering in wheat prices, some traders said.

US wheat gains marked a rebound from Monday's (July 12) losses and an initial slide on Tuesday (July 13) as worries about ongoing weather concerns in major wheat-producing countries continued to offer support. Wheat prices have rallied sharply since the end of June due to the weather concerns and the benchmark September contract is up about 15% so far this month.

CBOT September wheat closed up 13-1/2 cents, or 2.5%, at US$5.49-1/4 a bushel after ranging on the day from US$5.33 to US$5.50. Front-month July notched a six-month high of US$5.36-3/4 on a continuous basis on support from a weak dollar and firm equities market. August soy futures ended down 2-3/4 cents, or 0.3%, at US$9.95 a bushel after rallying to a session top of US$10.03-1/2. Deferred contracts ended higher.

Traders said adjusting of bull spreads weighed on nearby months with November soy boosted by forecasts for hotter and drier weather in the US in late July and August, which could harm the soy crop.

The USDA said late Monday (July 12) 65% of the US soy crop was in good to excellent condition, down from 66% a week ago. September corn closed down 4-1/2 cents, or 1.2%, at US$3.75-1/4 after ranging on the day from US$3.74-1/2 to US$3.82-1/2.

According to USDA, 73% of the US corn crop was in good to excellent condition, an improvement of two percentage points, as drier weather and warm temperatures boosted crop development.