July 17, 2012

 

Drought hits Latin American corn

Farmers are attending daily to the deterioration of their crops due to drought, as corn plants are seen at a drought-affected farm near Rufino, Santa Fe province, north of Buenos Aires, as well as Argentinean farmers who have heavily invested in their crops may be facing bankruptcy as the drought affects the crop cycle.

 

South African corn and wheat futures ended lower on Wednesday (July 11) for the second day in a row‚ on the back of a bit of profit taking and the USDA's crop stock report being expected for release later in the day.

 

"Corn and wheat futures positions are being squared off before the release of the report and expectations are for the US to cut its corn ending stock figure for the marketing period ending August next year. Less corn stock is expected due to a drought in the US corn and soy area‚" said Pieter van Wyk‚ Head of Commodities at PSG in Cape Town.

 

The near-dated July white corn contract was down BRL5 (US$2.45) at BRL2‚406 (US$1,181) a tonne and the September white corn contract shed BRL4 (US$1.96) to BRL2‚433 (US$1,194) a tonne. December white corn lost BRL3 (US$1.47) to BRL2‚488 (US$1,221) a tonne.

 

The near-dated July yellow corn contract shed BRL1 (US$0.49) to BRL2‚358 (US$1,157) and the September yellow corn contract lost BRL4 (US$1.96) to BRL2‚388 (US$1,172) a tonne. The December yellow corn contract shed BRL5 (US$2.45) to BRL2‚435 (US$1,195) a tonne.

 

The July wheat contract added BRL18 (US$8.83) to BRL3‚328 (US$1,632) a tonne and the September wheat gained BRL10 (US$4.90) to BRL3‚386 (US$1,660) a tonne‚ while the December wheat contract was down BRL4 (US$1.96) at BRL3‚267 (US$1,603) a tonne.

 

Meanwhile US grain and soy futures closed lower on Tuesday (July 10)‚ pressured by positioning ahead of government reports due on Wednesday (July 11)‚ Dow Jones Newswires reported. Corn futures led the declines‚ as market participants sold futures to exit long positions‚ reducing risk ahead of key government crop reports.

 

Investors also took some profits off the table after the recent rally in futures. Corn and soy futures had previously rallied by 29% and 20% respectively in the last three weeks‚ due to worries about declining yield and supply potential resulting from the worst Midwest drought since 1988.

 

CBOT July corn price dropped US$0.1425‚ or 1.8%‚ to US$7.61 a bushel‚ and December corn ended down US$0.125‚ or 1.7%‚ to US$7.175.

 

CBOT July soy closed US$0.1625‚ or 1%‚ lower at US$16.4875 a bushel‚ and November soy ended down US$0.0925‚ or 0.6%‚ at US$15.385.

 

CBOT September wheat dropped US$0.07‚ or 0.8%‚ to US$8.2125‚ September KCBT wheat closed US$0.075‚ or 0.9%‚ lower to US$8.22‚ and MGEX September wheat settled down US$0.0875‚ or 0.9%‚ at US$9.18.