September 3, 2008

 

US agriculture futures drop sharply overnight; eye crude

   

 

US agriculture futures fell sharply in overnight trading tracking crude oil and on the dollar's rise against most major currencies.

 

US traders return from a three-day-holiday weekend Tuesday (September 2).

 

The largest losses were in Chicago Board of Trade grain and soy prices because as Hurricane Gustav didn't appear to have damaged grain and oilseed exporting facilities in the US Gulf. In addition, weather forecasts included chances for favourable showers in the southern growing areas.

 

CBOT December corn was locked down the daily trading limit of 30 cents, or 5.1 percent, at US$5.55 a bushel, as of 0956 GMT. December wheat was down 37 ¼ cents, or 4.7 percent at US$7.63 ¾ per bushel (/bu) and November soy were down 66 cents, or 5 percent, at US$12.58/bu.

 

"The grains are under very real pressure, gapping down on the charts this morning," said analyst Dennis Gartman. "Gustav will actually prove to be beneficial as his remnants move north into the lower and upper Midwest in the next several days, sending much needed rain to the corn and soy crops there."

 

Bradley Jordan, technical analyst for FuturesTechs, said US$5.45/bu would be the next technical target for December corn, but that this level will be protected Tuesday by the daily trading limit.

 

Forecasters at T-Storm weather said Gustav will slide across the Delta and southern Missouri through southern Illinois and central Indian late in the week, but rainfall coverage of 1 inch to 3 inches probable for corn and soy.

 

T-Storm added that a sharp cool front moving across the Northern Plains, but a major frost is not expected. Amid the lateness of this season's US crops, producers are worried about early frost.

 

Wheat prices have already been under downward pressure due to forecasts calling for a record large world wheat crop.