CHICAGO: US corn futures rose by 4 percent on Monday for the best gains in a month as funds came charging back one day after a massive sell-off took prices to their lowest level in nearly a month.
"The fund selling was overdone yesterday. It was just fund liquidation and there was bargain buying today," said Jeff
Thompson, an analyst for ABN Amro.
Investors saw Thursday's fund-related breakdown of corn prices as an opportunity to snap up cheap supplies in view of outlooks for the US corn stockpile to fall to the lowest since the 1930s this year.
Wheat and soybean futures also gained in a recovery after each market was pounded Thursday as a resumption in corn planting in western stretches of the Corn Belt alleviated concerns about supply, traders said.
But there remains a lot of uncertainty about crop weather, adding to the volatility in corn, wheat and soybean markets.
"Things are going to improve a bit in the western belt, but could deteriorate late next week and next weekend," said Mike Palmerino, a meteorologist with Telvent DTN.
Excessive wet weather in the United States has slowed corn plantings, leading to concerns about a late start for this year's crop and a potential for reduced production.
CBOT July corn was up 27-1/4 cents at $7.56-1/2 per bushel, July wheat was up 23-3/4 cents at $8.01-1/4, and July soy up 40-1/2 cents at $13.94.
The falling dollar and short-covering lifted soybean futures and weather uncertainty remained an issue because rainfall continued to slow crop planting in much of the eastern half of the US Midwest crop belt, said Ann Frick, oilseeds analyst for Prudential Bache Commodities.
Wheat was down 3.8 percent for the week and was up 0.8 percent for April. Corn was up 2.3 percent for the week and up 8.8 percent for the month. Soybeans were up 0.9 percent for the week and down 1.2 percent for the month.
"There was short-covering after yesterday's big sell-off and the outside markets are commodity-friendly with the weaker dollar, higher crude oil and gains in metals," said Don Roose, president and analyst for US Commodities in Des Moines, Iowa.
The rebound in grain and oilseed prices on Friday also stemmed from the US dollar hitting a three-year low against a basket of currencies on Friday. The dollar will end the month with its biggest loss since September, with more weakness expected as the Federal Reserve keeps interest rates low while the European Central bank raises them.
Light to no deliveries also helped the grain market recover from Thursday's sell-off.
There were no deliveries on the May futures contracts for corn and soybeans and only light deliveries for wheat. Light deliveries on a futures contract indicates that owners of the commodity want to retain ownership, a bullish signal for futures prices.
WET WEATHER CONTINUES TO SUPPORT
Support also stemming from continued wet weather in the eastern portion of the US Midwest.
"There is more rain forecast for next week in the east and that will keep plantings to a minimum so that's supportive," Roose said.
Declining open interest after Thursday's big sell-off indicated the price drops were due to liquidation of long positions rather than any new net selling, a long-term bullish indicator for wheat, corn and soybean futures prices.
Corn saw its largest two-day drop in open interest since late November and the number of open contracts has fallen nearly 8 percent in the last six sessions.
Open interest in soybeans has fallen five days in a row and six days in a row in wheat.
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