U.S. grains: Corn rebounds after multi-year lows

Soybeans firm, wheat sags

CBOT May 2020 corn with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. corn futures rose on Tuesday, clawing back from last week’s multi-year lows as traders covered short positions and farmer sales stalled, analysts said.

Wheat futures declined, pressured by profit-taking after recent rallies, while soybeans closed modestly higher.

Chicago Board of Trade May corn settled up 3-3/4 cents at $3.47-1/4 per bushel, after dropping last week to $3.32, a contract low and the cheapest for a most-active futures contract on a continuous chart since September 2016 (all figures US$).

CBOT May wheat ended down one cent at $5.61-1/2 a bushel and May soybeans were up 2-3/4 cents at $8.86-3/4.

Corn rallied after falling sharply last week as plunging crude oil futures hammered margins for U.S. producers of corn-based ethanol fuel, prompting some cuts to production.

While the poor outlook for ethanol continued to hang over the market, CBOT corn futures bounced as farmer offerings of the yellow grain stalled.

“Even though we’ve got this cutback in corn demand for ethanol, you’ve still got other components — livestock feeding and exports — and you’ve got to originate grain. The market is trying to rally the nearby (futures contract) and narrow the spreads,” said Dan Cekander, president of DC Analysis.

Wheat futures fell on profit-taking a day after the CBOT May contract surged four per cent to a one-month high, fueled by milling demand as consumers stockpiled bread to settle in at home and avoid the coronavirus.

Additional pressure on Tuesday stemmed from weekly U.S. Department of Agriculture crop reports that showed improving winter wheat ratings in the U.S. Plains, bolstering yield prospects.

“Those ratings are bound to improve, as long as there’s moisture and there isn’t any concern for winterkill showing up. That makes sense to weigh on wheat a little bit,” said Rob Hatchett, an analyst with Doane Advisory Services.

Soybean futures were choppy while expectations of added demand for soymeal underpinned values.

“It mainly has to do with the backup at the ports in China,” said Joe Vaclavik, an analyst with Standard Grain. “Some municipalities in Brazil and Argentina restricting exports. I think it’s a logistics issue.”

Traders were looking ahead to the U.S. Department of Agriculture’s March 31 planting intentions and quarterly stocks reports, which have a history of jolting CBOT futures.

Some analysts noted recent declines in CBOT corn futures occurred after USDA surveyed farmers, in early March, for its plantings report.

“There’s a good chance the corn (acreage) numbers will be discounted,” Hatchett said.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Christopher Walljasper in Chicago, Michael Hogan in Hamburg and Naveen Thukral in Singapore.

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