Chicago | Reuters — U.S. corn futures eased on Tuesday, weighed down by weakness in the cash market and an ample supply cushion, traders said.
Wheat firmed, buoyed for the second day in a row by the U.S. government’s surprise cut to its domestic ending stocks estimate while soybeans rose on good export prospects.
Chicago Board of Trade corn futures hit a one-week low and briefly dropped below their 100-day moving average in early morning trading before a wave of bargain buying pulled prices off lows.
Corn prices have fallen for two days in a row, with the market shrugging off the U.S. Agriculture Department’s bigger-than-expected cut to end stocks and focusing on the huge boost to supplies compared with a year ago.
“Corn sold off on the premise that the market failed to react to a set of friendly numbers yesterday,” said Greg Grow, director of agribusiness at brokerage Archer Financial Services. “It kind of illustrates that the recent rally — 40 cents off the lows — already accounted for the bullish export numbers.”
CBOT March corn settled 1-1/2 cents lower at $4.41-1/2 a bushel (all figures US$).
Some recent farmer selling has boosted supplies for processors and ethanol producers, causing cash bids to weaken.
“Corn continued to slip on thoughts that the USDA balance sheet just can’t get any tighter for the rest of the old crop,” Charlie Sernatinger, analyst with ED+F Man Capital, said in a note to clients.
Strong export demand pushed soybean prices into positive territory after a weak opening. Soy bids firmed on the CIF market on Tuesday morning as icy conditions along Midwest rivers limited near-term supplies available to exporters.
Additionally, USDA said private exporters reported the sale of 116,000 tonnes of U.S. soybeans to China for delivery during the 2014-15 marketing year.
CBOT soybeans for March delivery were 9-1/4 cents higher at $13.34-3/4 a bushel.
But a growing global soybean supply base kept a lid on the gains.
Conab, Brazil’s government crop supply agency, cut its forecast for the first time in the 2013-14 crop year but said the country’s harvest would still be a record 90.01 million tonnes. It said that the hot, dry weather that has hit the country for the past month and a half had not yet impacted the forecast but sustained drought could affect its March estimate.
ED+F Man Capital’s Sernatinger said there was talk that Chinese buyers were looking to switch some of the soybeans they had previously agreed to buy from the U.S. with cheaper Brazilian supplies.
CBOT March soft red winter wheat was up 5-1/2 cents at $5.90-1/4 a bushel. Prices have risen two per cent during the past two days and closed above their 40-day moving average for the first time since Oct. 30, a bullish technical signal.
Australia, the world’s second-largest exporter, raised its forecast for 2013-14 wheat output by three per cent, as strong production in Western Australia has pushed the crop above 27 million tonnes for only the third time.
— Mark Weinraub is a Reuters correspondent covering grain markets from Chicago.