U.S. grains: Corn firms as oil rally offsets Midwest weather

CBOT December 2019 corn with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. corn and soybean futures rose on Monday as support from surging crude oil prices more than offset pressure from favourable weather for late-developing crops.

Signs of easing U.S.-China trade tensions also buoyed the market after confirmation on Monday of more Chinese purchases of U.S. soybeans that triggered a rally last week.

Wheat firmed in tandem with rising corn and as dry conditions in some Southern Hemisphere wheat areas stoked concerns about smaller harvests in key exporters such as Australia and Argentina.

Grain prices were broadly supported by Monday’s crude oil rally of about 15 per cent, its biggest price jump in over 30 years, after weekend attacks on Saudi Arabian oil facilities.

The market drew additional support from a tentative White House plan to increase the amount of biofuels that oil refiners are required to blend each year to compensate for exemptions handed out to small refiners.

“We’re finding carryover support from the uncertainty with Saudi Arabia and the energy issues,” said Mike Zuzolo, president of Global Commodity Analytics.

“If energy prices go up, then bean oil and soybeans and corn should find some support through biodiesel and ethanol.”

Chicago Board of Trade December corn rose 5-1/4 cents to $3.74 a bushel, its highest since Aug. 30, while CBOT December wheat jumped 5-1/4 cents to $4.88-3/4 a bushel (all figures US$).

November soybeans touched a 1-1/2 month high of $9.04-3/4 a bushel and ended up 1-1/4 cents at $9.

Soybeans were supported by a National Oilseed Processors Association report that showed August crushings were 168.085 million bushels, above the average trade estimate of 162.018 and the seventh highest crush on record for any month.

The U.S. Department of Agriculture (USDA) on Monday confirmed private sales of 256,000 tonnes of U.S. soybeans to China in what traders said was a further confirmation of sales of at least 600,000 tonnes reported by Reuters last week.

Grain traders also focused on yield prospects in the run-up to the U.S. harvest and forecasts for mild Midwest weather. The improved weather raised expectations that crops planted very late in a soggy spring could still achieve decent yields.

“Increasing warmth through the end of September will likely continue to lower frost/freeze risks, and the latest satellite imagery points to overwhelmingly positive late-season conditions in most major agricultural areas,” said Refinitiv Agriculture Research analysts.

USDA, in a weekly crop report, held its U.S. corn condition forecast unchanged and trimmed its soybean condition estimate. Both were near trade expectations.

Reporting for Reuters by Karl Plume in Chicago; additional reporting by Gus Trompiz in Paris and Colin Packham in Sydney.

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