Corn faces 5th week of decline, wheat climbs for 4th day

In Commodity News 09/01/2016

Chicago corn futures edged higher on Friday but the market was on track for a fifth week of decline, pressured by ample world supplies and slowing demand for U.S. shipments. Wheat rose for a fourth consecutive session as short-covering by speculative investors underpinned the market, although weak demand for pricey U.S. cargoes capped gains.

Chicago Board of Trade most-actively traded corn is down 1.4 percent this week, a fifth week of losses. The market hit a near seven-month low of $3.48-1/2 a bushel on Thursday. Soybeans are up 0.5 percent for the week, their first weekly gain in three weeks. “U.S. agricultural commodities are facing stiff competition as South American products are flooding the market and the Chinese economic situation is causing concerns over demand,” said Kaname Gokon at brokerage Okato Shoji in Tokyo.

“The market is looking at the USDA report for direction, but we expect prices to remain under pressure.” The U.S. Department of Agriculture will issue its latest supply and demand report next week. It is expected to show an increase in corn supplies. The USDA reported on Thursday that export sales of U.S. corn in the week to Dec. 31 were 252,900 tonnes, below analysts’ expectations for 400,000 to 600,000 tonnes. Export sales of U.S. wheat in the week to Dec. 31 were 76,500 tonnes, a marketing year low that fell below analyst expectations for 200,000 to 400,000 tonnes.

Corn was trading 0.2 percent higher at $3.53-3/4 a bushel by 0317 GMT on Friday, while wheat gained 0.4 percent to $4.70-1/4 a bushel. Soybeans were up 0.5 percent to $8.68-1/5 a bushel. Commodities are under pressure from concerns over a slowing Chinese economy, potentially reducing demand from the world’s largest buyer of soybeans. Turmoil in China reinforced negative sentiment in the grain markets as large South American supplies are set to flow overseas, reducing demand for U.S. crops.

Commodity funds bought an estimated net 4,000 CBOT wheat contracts on Thursday, trade sources said. The funds were net even in corn and soybeans. Argentina’s 2015-16 wheat output is now forecast at 10.1 million tonnes compared with a previous estimate of 9.5 million tonnes, the Buenos Aires Grains Exchange said in its weekly crop report on Thursday.

The bourse cited higher than expected yields as the reason for the revision.

Prices at 0317 GMT

  Contract        Last    Change  Pct chg  Two-day chg MA 30   RSI 
CBOT wheat     470.25     1.75  +0.37%    +1.62%     477.23   52

  CBOT soy       868.50     4.00  +0.46%    +0.43%     874.37   56
CBOT corn      353.75     0.75  +0.21%    +0.14%     367.98   30
  CBOT rice      $11.57   -$0.06  -0.47%    -2.24%     $11.53   47

  Euro/dlr       $1.089  -$0.005  -0.45%    +0.99%
WTI crude      $33.78    $0.51  +1.53%    -0.56%     $37.38   32
  Currencies                                                

  USD/AUD         0.705    0.004  +0.61%    -0.27%

Most active contracts

Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight

RSI 14, exponential

Source: Reuters (Reporting by Naveen Thukral; Editing by Joseph Radford)