Corn futures tumbled for a second day in a row on Friday, ending nearly 4 percent lower a day after a government report showed improved crop and supply prospects in the United States. Soyabeans bounced back from a sell-off on Thursday fuelled by the US Department of Agriculture's acreage and stocks reports, and wheat prices climbed as well, buoyed by short-covering moves.
The low prices have sparked some signs of fresh demand, particularly from Asian buyers. China has purchased as much as 1.6 million tonnes of new-crop US corn in recent dealings, taking advantage of the steep price drop to replenish its reserves. USDA on Friday announced the sale of 1.14 million tonnes of US corn to unspecified buyers, but traders said it effectively confirmed rumours the past two weeks that China had bought a large quantity of corn from the United States.
US Commodities analyst Dax Wedemeyer said news of Chinese demand helped underpin prices, as did technical signs that the market was oversold. But that was offset in part by profit-taking ahead of the three-day weekend. Markets are closed Monday for the US Independence Day holiday.
"News that China came in ... is helping to hold the values. And you might see some end-user buying. This seems to be fair value," he said. Knowledge that weather patterns can quickly change should keep the market on edge through the summer, Wedemeyer said.
The crop is "not in the bag yet," he said. In addition to Chinese interest in US corn, feed millers in Japan, the world's biggest corn buyer, are also expected to lock in supplies, buying cargoes for August and September shipment after a slowdown in imports since the March earthquake.
The benchmark new-crop December corn contract at the Chicago Board of Trade slid below $6 for the first time since March 31 and closed down 23-3/4 cents, or 3.8 percent, at $5.96-3/4 a bushel. Thinly traded expiring July corn settled up 11-3/4 cents at $6.40-3/4. CBOT July wheat ended down 1/4 cent at $5.84-1/2, and closed down 8.2 percent for the week at its lowest level in nearly a year. CBOT July soyabeans ended up 16 cents at $13.22-1/4. Funds were sellers of an estimated net 15,000 corn contracts and bought 4,000 soyabean contracts.
Corn prices posted a record drop on Thursday, with prices falling 20 percent from record highs near $8 per bushel posted last month. Some analysts were skeptical of USDA's latest forecast, which put the corn stockpile at 3.67 billion bushels on June 1 and pegged plantings at 92.28 million acres. Both figures were well above analyst expectations.
Still, investment bank Goldman Sachs on Friday said it lowered its three-, six- and 12-month price forecasts for corn, soyabeans and wheat, citing USDA's acreage and stocks reports. Goldman cut its three-month price forecast for corn to $5.90 per bushel, from $8 previously. It cut its six-month forecast to $5.75, from $7.80, and its 12-month forecast to $5.70, from $7.00. Goldman lowered its three-month price forecast for soyabeans to $13 per bushel, from $14, and its three-month forecast for wheat to $5.90 a bushel, from $8.
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