Corn Declines as Speculators, Farmers Lock in Gains From Rally

Corn futures slumped, snapping three days of gains, as some speculators and farmers locked in profits on speculation favorable weather in the U.S. and China may boost output. Soybeans fell and wheat rose, reported NA “Kazakh-Zerno” with reference to the “Bloomberg“.

Corn for December delivery fell as much as 3 percent to $3.9525 a bushel on the Chicago Board of Trade, the biggest intraday decline for the most-active contract since May 28. The contract traded at $4.01 a bushel, down 1.5 percent at 9:56 a.m. Singapore time. Futures climbed 5.2 percent in the three sessions through July 16.

“We’re seeing some selling from speculators and possibly some producers to lock in prices,” Toby Hassall, an analyst at CWA Global Markets Pty, said by phone from Sydney today.

Corn and soybean crop conditions in parts of the North China Plain may improve as rains and lower temperatures were forecast over the weekend and this week, while the eastern part of the U.S. Midwest will have “light, sporadic showers over the next few days,” Telvent DTN Inc. said in a July 16 report.

China is the world’s second-largest corn consumer and the biggest soybean buyer, while the Midwest is the largest U.S. corn and soybean growing region.

Forecasts for rainfall in the U.S. Midwest and China “will boost the crop outlook,” pushing some speculators to close long positions or bets on price gains, Hassall said.

Hedge-fund managers and other large speculators increased their net-long position in Chicago corn futures by 77,256 contracts or 105 percent in the week ended July 13, from a week earlier according to U.S. Commodity Futures Trading Commission data.

Rising Prices

Speculative long positions outnumbered short positions by 150,573 contracts on the Chicago Board of Trade, the commission said in its Commitments of Traders report.

“Some speculative traders may be looking to take those positions off the table,” Hassall said, referring to bets prices will rise. “We’re seeing the market reevaluating those influences.”

Corn and soybean crops in the U.S., the world’s biggest grower and exporter, are in good or excellent condition and may produce above-average yields this year, according to a survey of five Midwest states by SGS SA released July 16.

Corn that’s been planted earlier than normal in the U.S. is “reaching a point where wet, dry or hot conditions have decreasing effect on yield,” SGS Crop Services said in a report.

Wheat Gains

Wheat for September delivery gained as much as 1.8 percent to $5.9775 a bushel, recouping the loss posted in the previous session, on lingering concerns dry weather in Russia and growing areas in Europe may pare global supply. The contract traded at $5.9575 a bushel, up 1.5 percent at 9:50 a.m. Singapore time.

Russia and Kazakhstan were forecast to have above-normal heat and below-normal rainfall in the 10 days following July 16 adding to crop stress, DTN said in its forecast.

Russia was the world’s third-largest wheat grower in the 2009-2010 growing season while Kazakhstan was the third-largest in the former Soviet Union, according to the U.S. Department of Agriculture.

“There is a fundamental basis to the rally,” CWA’s Hassall said. “The recent weather threats have certainly caused many people in the market to revise their expectations of the supply-demand balance going forward.”

Still, the most-active contract may drop to $4.94 a bushel by Dec. 31 as prospects for the second-biggest wheat stockpiles in almost a decade overwhelm a damage caused by drought, according to a Bloomberg survey of 14 analysts.

Soybeans for November delivery fell for a second day, losing as much as 1.3 percent to $9.7225 a bushel before trading at $9.84 in Chicago.

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