BLBG: Corn Futures Slump to Eight-Month Low on Global Demand Concern
By Luzi Ann Javier
June 7 (Bloomberg) -- Corn futures slumped to an eight month-low on concerns that Europe’s debt crisis will curb demand for grains and as favorable weather boosts yield prospects in the U.S., the largest supplier.
Corn for July delivery fell as much as 0.9 percent to $3.37 a bushel, the lowest price for the most-active contract since Oct. 5. It traded at $3.3775 a bushel at 2:04 p.m. in Singapore.
Scattered rain showers and thunderstorms in the Midwest, the largest growing region in the U.S., and parts of China will favor corn development, Telvent DTN Inc. said in a forecast on June 4. The Dollar Index rose for a seventh session, set for the highest level since March 2009, as investors seek refuge in the U.S. currency after the Group of 20 finance chiefs said the economic rebound faces “significant challenges.”
“We’re seeing crop conditions in the U.S. are very good for corn and it looks like it’s going to be a larger crop,” Michael Pitts, director for commodity sales at National Australia Bank Ltd., said by phone from Sydney. “Certainly, what’s happening in the financial market is impacting commodities generally.”
The MSCI Asia Pacific Index was headed for the biggest decline since March 2009 as commodities including oil, gold and copper fell on concern Europe’s debt crisis may derail the economic recovery.
Crop Planted
About 97 percent of the U.S. corn crop was planted as of May 30, up from 93 percent a week earlier and 92 percent a year earlier, the U.S. Department of Agriculture said June 1. The U.S. is forecast to account for 41 percent of global output estimated by the USDA at 835.033 million tons in the 2010-2011 marketing year. China, the world’s second-largest corn consumer, is forecast to account for 19 percent of demand, the USDA said.
Twenty-four of 37 traders and analysts surveyed by Bloomberg News from Chicago to Tokyo on June 4 said corn will fall, and 18 of 35 respondents said soybeans will drop this week on speculation the dollar will extend a rally, reducing the appeal of commodity investments.
Soybeans for July delivery lost 0.2 percent to $9.3275 a bushel, paring a loss of as much as 0.7 percent.
Imports by China, the world’s largest buyer of the oilseed, may rise to 5.2 million tons this month, from 5 million tons in May, the Ministry of Commerce said in a forecast dated June 4.
July-delivery wheat was little changed at $4.36 a bushel on speculation that investors may be closing bets on price declines after a slump to the lowest level in more than three years. Futures earlier lost as much as 0.6 percent to $4.3325 a bushel, the lowest price since April 2007, on Europe’s debt crisis.
Three-Year Low
“Every market has a psychological barrier and a three year-low is pretty impressive,” Peter McGuire, managing director of CWA Global Markets Pty said by phone from Sydney today, adding that the slump in wheat futures have may lured some investors into closing their short positions.
Still, he said “we’re outright bearish” on the grain market, as global supply of wheat, corn and soybeans expands.
Winter-wheat production in the U.S., the world’s biggest exporter, will total 1.481 billion bushels, Informa Economics Inc. said June 4, raising its estimate from 1.466 billion bushels last month.
The higher U.S. winter-wheat output estimate by Informa “is reinforcing that perception that the crop is getting larger and that continues to put pressure on wheat, combined with risk aversion in the financial markets,” Pitts said.
The USDA forecast on May 11 that global wheat stockpiles will expand 2.4 percent to 198.089 million tons at the end of the 2010-2011 marketing year, the highest in nine years, with the U.S. harvest at 1.458 billion bushels in the year beginning June 1. The USDA will release its next outlook on global agricultural supply June 10.
Hedge-fund managers and other large speculators increased their net-short positions in Chicago wheat futures in the week ended June 1, according to U.S. Commodity Futures Trading Commission data.
Speculative short positions, or bets prices will fall, outnumbered long positions by 54,877 contracts on the Chicago Board of Trade, the Washington-based commission said in its Commitments of Traders report. Net short positions rose by 2,000 contracts, or 4 percent, from a week earlier.
To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net
