August 4, 2011

 

CBOT corn futures gain further amid unfavourable weather

 

 

Worries over hot weather that will affect corn harvests continued to bolster the corn market, thus, causing CBOT corn to reach an eight-week high on Wednesday (Aug 3).

 

According to Reuters, wheat slipped from a two-week top and soy fell 0.2% as renewed fears about the health of the global economy pressured commodity markets, including oil and industrial metals.

 

"The grain markets are feeling the pressure of that, but if we take a look at the corn market, it has popped above last night's close and reflected expectations that US corn production will be revised lower by the USDA next week," a commodity strategist said.

 

"There is caution across the macroeconomic environment. It is very much of an influence on the grains complex as risk aversion has risen."

 

CBOT new-crop December corn rose 0.1% to US$7.16-1/2 a bushel, the highest since June 9.

 

Actively traded September wheat fell 0.2%, after climbing 6% on Tuesday (Aug 2) to its highest since July 19, while November soy was down 0.2% at US$7.16-1/2 a bushel.

 

Commodity brokerage firm INTL FC Stone estimated US 2011 corn production at 13 billion bushels, with an average yield of 153.2 bushels per acre. The figures compared with the USDA's current corn production forecast of 13.47 billion bushels, with an average yield of 158.7 bpa.

 

Last week, the firm's president indicated in an interview with Reuters its survey was likely to point to a lower output, even below 13 billion bushels.

 

Stone's soy output figure was below the USDA's soybean production forecast of 3.2 billion bushels, based on an average yield of 43.4 bpa.

 

The USDA is due to release updated crop forecasts on August 11, its first estimates of the season based on field surveys.

 

On Monday (Aug 1), it left the overall US corn crop condition rating unchanged from the prior week, with 62% of the crop seen in good-to-excellent condition.

 

Heat stress on US corn and soy crops will continue this week but relief for crops is expected by the weekend, agricultural meteorologist said.

 

Even Australia's wheat crop is suffering from adverse weather, with cold and dry conditions in the key eastern grain producing state of New South Wales, which may hit output, according to the Commonwealth Bank of Australia.

 

Still, offsetting the deteriorating outlook in New South Wales is an improved outlook for Western Australia, typically the biggest grain exporting state in the world's fourth-biggest wheat shipper.

 

Bearish sentiment in global financial markets weighed on the grain markets, despite bullish fundamental factors.