Thursday, 14 June 2012 09:36
SINGAPORE: Chicago soybeans slid around half a percent on Thursday, falling to a one-week low as concerns over global growth weighed on the market, while spot-month corn rose for a second straight session on tight old-crop supplies.
Wheat inched up, tracking strength in corn and aided by dry weather threatening yields in top exporters Russia and Australia.
"What we are seeing is that macro factors are driving the market right now," said Abah Ofon, an analyst at Standard Chartered Bank in Singapore. "The crisis in Europe and concerns over global growth are clouding the outlook, forcing people to come out of risky assets."
Chicago Board of Trade July corn rose 0.3 percent to $5.94-1/4 a bushel by 0322 GMT, while wheat gained 0.5 percent to $6.19 a bushel. July soybeans fell 0.4 percent to $14.02-1/2 a bushel, after touching a low of $13.97-1/4 earlier in the session.
Asian shares eased as weak US retail sales raised concerns about sluggish economic growth, while an Italian debt auction later will test market confidence in whether it can avoid becoming the next victim in the euro zone crisis.
The dollar index, which measures the strength of the dollar against a basket of currencies, rose 0.1 percent, making commodities priced in the greenback expensive for importers.
On the fundamental side analysts remained bullish on soybeans and wheat.
"We are bullish on soybeans as crush margins in China are still positive," said Ofon. "I definitely think that there is a likelihood for the wheat market to inch higher as there is weather risk in the very near term."
Soybean supplies are likely to remain tight until next year following lower output in drought-hit Latin America. The US Department of Agriculture in its monthly report this week painted a bullish picture for the oilseed market.
US soybean will shrink to a three-week supply in August at the end of this marketing year and shrivel to a two-week supply in August 2013, the second-smallest total in 10 years, the USDA said.
China was forecast to import 57 million tonnes of soybeans this marketing year, up 1 million tonnes from the May forecast, and more than 60 percent of soybeans on the world market.
Australia On Wednesday slashed its winter wheat production forecast by more than 7 percent, heightening global supply worries, a day after projections of harsh weather hitting output in top exporters Russia, Europe and the United States.
Tight US old-crop corn supplies supported July corn futures.
Corn spot basis bids held steady at US Midwest elevators, firmed at river terminals, and were slightly mixed at processors on Wednesday, as some farmers sold light loads of old-crop corn.
For the new-crop December corn, which has lost almost 6 percent this week, the outlook is bearish with forecasts of more rains.
US weather patterns have now shifted to a wetter scenario, though they are still short of perfect for the corn crop that was planted early and is pollinating early. Last week, dryness was expected to continue in the US Midwest for at least two weeks, a threat to corn yield prospects.
The analyst average forecast 2012 corn production at 14.182 billion bushels, down from the current USDA outlook for 14.790 billion but still a record high, above the previous record of 13.1 billion bushels.
Copyright Reuters, 2012