U.S. grains: Corn down second session after five-year high

CBOT July 2019 corn with Bollinger (20,2) bands. (Barchart)

Chicago | Reuters — U.S. corn futures fell about two per cent on Wednesday, sagging for a second straight session as an absence of fresh bullish news prompted investors to book profits after multi-year highs set this week.

Soybean and wheat futures followed the weak trend, with a few analysts citing improving U.S. weather forecasts.

Chicago Board of Trade (CBOT) July corn settled down 8-3/4 cents at $4.41 per bushel (all figures US$). July soybeans ended down 10-1/4 cents at $9.03-1/4 a bushel and July wheat finished down 9-1/4 cents at $5.22-1/4 a bushel.

“Right now, I think this is nothing but liquidation. The bull market needs to be fed every day,” said Tom Fritz, a partner with EFG Group in Chicago.

Commodity funds liquidated a massive net short position in CBOT corn during May and flipped to a net long position this month as unprecedented Midwest planting delays threatened U.S. corn production prospects, sending CBOT corn futures soaring.

CBOT July corn peaked at $4.64-1/4 a bushel on Monday, the highest for a most-active contract since June 2014, before easing on Tuesday and Wednesday.

However, front-month July gained on Wednesday relative to the September and December contracts on spreads, reflecting firm domestic cash markets for the yellow grain.

End-users such as ethanol and livestock producers have been bidding up for supplies of old-crop corn in recent weeks due to uncertainty about the size of the 2019 crop.

Some analysts tied Wednesday’s weaker tone in futures to weather outlooks calling for drier conditions in the Midwest and parts of the Plains that could bolster soybean planting progress and the harvest of winter wheat. But other forecasts predicted that wet weather would persist.

“Forecast is unchanged. Rain should be active across eastern, central, and west central areas through Sunday,” space technology company Maxar said in a daily weather note, referring to the Midwest corn and soybean belt.

CBOT wheat futures closed lower, following corn and soybeans.

Egypt’s state grains buyer purchased 290,000 tonnes of wheat in an international tender, including 110,000 tonnes of Russian and 180,000 tonnes of Romanian wheat.

No U.S. wheat was offered. Cash prices for U.S. wheat have firmed in the export market since early May as CBOT wheat futures have followed corn futures higher.

In the Egyptian tender, Russian wheat offers on a free-on-board (FOB) basis ranged from $196.86 to $204 per tonne, while trade sources said U.S. soft red winter wheat at the U.S. Gulf was offered this week near $233-$234 FOB.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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