US corn snaps back on bargain hunting after sell-off

SYDNEY: US corn futures rose more than 1 percent in early Asian trading on Tuesday as end users and bargain hunters stepped back into the market after prices tumbled on Monday as fears of slowing global growth rattled commodities markets. Chicago Board of Trade (CBOT) corn for July delivery climbed 1.48 percent to $6.36 per bushel, recovering from a 1.4 percent fall on Monday.

Wheat for July delivery rose 1.08 percent to $6.57-3/4 per bushel, supported by demand for feed wheat because of high corn prices.

July soybeans added about 0.3 percent to $13.34-1/4 per bushel, extending modest gains on Monday after the US Department of Agriculture (USDA) reported fresh sales to China.

Investors have moved to liquidate long positions in grains due to worries about the Greek debt crisis, Chinese inflation and slow US growth.

After a year-long rally, prices are under fundamental pressure from the advancing US winter wheat harvest and improved crop weather for recently planted US corn.

Fund liquidation appears to signal the start of a downward trend after the year-long rally. During the latest reporting week, large speculators cut their net long positions in corn by 22 percent, and widened their net short positions in wheat to the largest since November 2010.

The USDA will issue its anxiously awaited annual acreage report on Thursday, along with its quarterly US grain stocks data.

The acreage report, based primarily on a survey of farmers in the first two weeks of June, could shed light on whether excessive rains and flooding from the upper Midwest to the South affected the seeding of the corn and soy crops.

Weekly export inspections of US corn issued Monday by USDA for the week ended June 23 totalled 28.9 million bushels, down 34 percent from the prior week and 27 percent lower than the same week a year ago. Corn is suffering stiff competition from feed wheat.

Brent crude prices rose on Monday, bouncing off lows as the euro rallied against the dollar on firmer hopes Greece will pass an austerity program as Europe fashioned a solution to Athens' debt woes. ICE Brent crude for August rose 87 cents to settle at $105.99 a barrel.

The euro rose on Monday as investors bet Greece's parliament will approve a fiscal austerity package needed for the country to get emergency aid and avoid defaulting on its debt.

US stocks rose from three days of losses on Monday, led by banks after news of more favourable capital requirements and optimism over Greece's austerity plan, but investors cautioned against high hopes. The Dow Jones industrial average gained 108.98 points, or 0.91 percent, to 12,043.56.

Copyright Reuters, 2011