US grains drop
IOL Business - May 8th 2012, 08:01
US grain futures dropped on Monday as investors fled riskier assets, after Greek and French polls stoked doubts that struggling euro zone economies could continue to pursue austerity measures crucial to resolving the bloc's debt crisis.
Oil hit multi-month lows while other commodities and equities also slid, with a much weaker-than-expected jobs data from the world's largest economy, the United States, further clouding global growth prospects.
Chicago Board Of Trade July corn fell 0.7 percent to $6.15-3/4 a bushel by 12:48 SA time, following an increase of 0.9 percent on Friday due to concerns over tight near-term supply.
July soybeans fell 0.8 percent to $14.66-3/4 a bushel after rising 0.3 percent in the previous session on strong demand. July wheat futures dropped 0.5 percent to $6.06-3/4 a bushel amid continued ample supply forecasts.
“Today we are seeing some risk aversion in the grains market due to political risk emanating out of the euro zone, and on Friday we that saw employment numbers in the US is weakening,” Lynette Tan, an analyst at Phillip Futures in Singapore said.
“So today, we are likely to see some sell-off, particularly in corn.”
Wheat prices hit by bumper harvest forecast
Wheat futures extended losses amid forecasts for a bumper harvest. Private analytical firm Informa Economics raised its outlook for US winter wheat production by 1.5 percent to 1.656 billion bushels, traders said.
Kansas appears to be on track this year to produce its largest hard red winter wheat crop since 2003 with a record yield possible, said crop scouts on Thursday who had just completed this year's annual tour that found fields helped by a mild winter and a wet spring.
The crop, which got off to a shaky start in some parts of this leading hard red winter wheat state due to a devastating drought across the southern Plains, is expected to be 46 percent larger than last year's, adding to overflowing global supplies.
European wheat futures also weakened but received some support from the fall of the euro after Greek and French elections cast doubt on politicians' commitment to austerity plans aimed at tackling the euro zone debt crisis, traders said.
Paris-based new-crop milling wheat benchmark November was down 0.1 percent at 195.50 euros a tonne, rebounding from a low of 193.50 euros at the open.
The soybean market, which has been supported in recent weeks by Chinese demand and lower South American supply due to a drought, also came under pressure on Monday.
Tan said the sell-off was driven by concerns that Chinese growth will slow amid global economic uncertainty.
The soybean sell-off comes despite continued demand late last week. The USDA reported private exporters struck deals to sell 120,000 tonnes of US soybeans to unknown destinations.
Foreign demand for US soybeans has increased due to crop losses in drought-hit South America, which competes with the United States for export business. - Reuters
Corn surged on Friday, driven by a rally in the cash market on worries that supplies of corn from last year's harvest may run low before stocks can be replenished. Supplies were further squeezed as farmers, anticipating higher prices, remained reluctant to sell, traders said.
Corn demand has been strong in recent weeks on a decline in prices. US corn export sales soared to a 21-year high in the week before last, aided by active buying by China that snapped up nearly 3 million tonnes of the grain to rebuild stocks and tamp down its near-record-high domestic prices.
A strong interest in corn continued last week, with the Department of Agriculture on Friday confirming orders from Mexico and South Korea.
CIF basis bids for corn shipped by barge to the US Gulf Coast rose sharply on Friday, with basis bids and offers up 3 cents for shipment in July and 4 cents for shipment in the first half of August, traders said.
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