Corn, soy dip on improved US crop conditions

SINGAPORE: Chicago corn and wheat slipped on Wednesday, as forecasts for crop-friendly weather in the US Midwest and a government report showing slight improvement in crop ratings weighed on sentiment.

Losses in the US agricultural markets were, however, limited by expectations of strong physical demand -- which boosted prices in the last session -- after a selloff in June.

Chicago Board of Trade new-crop December corn was down 0.3 percent, or 2 cents, to $6.10-1/2 a bushel by 0222 GMT, while September wheat fell three quarters of a cent to $6.34-3/4 a bushel. November soy contract lost 1-1/4 cents to $13.16-3/4 a bushel.

"June selloff (in wheat) was too aggressive and it has brought down prices to levels that consumers would view as good value," said Luke Mathews, commodity strategist at Commonwealth Bank of Australia. "I would certainly like to see some confirmation of solid consumer activity before being convinced that the bottom has formed."

The front-month corn fell 16 percent in June, while wheat lost 25 percent.

US corn and soybean condition ratings gained 1 percentage point in the latest week, matching analyst expectations, as the developing crops benefited from largely warm and dry weather.

After the market closed on Tuesday, the US Agriculture Department rated the corn crop at 69 percent good to excellent for the week ending July 3, up from the previous week's rating of 68 percent and even with a Reuters poll of 10 analysts and traders.

It said US spring wheat condition was 70 percent good to excellent compared with 69 percent a week ago and 83 percent a year ago.

On Tuesday, Chicago Board of Trade July wheat rose 5 percent, its biggest gain in seven weeks, after last week's drop to an 11-month low. Corn futures gained around 6 percent in thin volume on bargain hunting following the selloff triggered by a US report that showed larger-than-expected domestic supplies.

Money managers are willing to dip their toes in the corn and wheat markets again as part of their strategy for the recently begun third quarter.

Asian grain importers are actively seeking cargoes after last week's selloff, led by South Korean feed makers which are eyeing about 350,000 tonnes of corn, and Sri Lanka buying US winter wheat.

Millers in Malaysia, Indonesia, Thailand and the Philippines are inquiring about corn and wheat shipments.

The weather around key growing areas of the US Midwest is expected to be generally drier this week after above-average rainfall so far this growing season, according to agricultural meteorologists.

Temperatures should be normal and then warm up a bit next week as the crop enters its key pollination phase, critical for determining final yields. The weather is allowing the crop to make up for the problems related to a delayed planting season.

The dollar index , which measures the strength of the greenback against a basket of currencies, fell 0.2 percent on Wednesday. A weaker dollar makes US commodities competitive in the international market.

Copyright Reuters, 2011