US corn, wheat futures fall

Chicago corn futures fell to their lowest level in almost eight weeks on Thursday while wheat and soyabean prices also fell, tracking widespread losses in commodity markets. Oil and silver led the retreat on Thursday as another wave of selling hit the commodity complex, exacerbated by the burgeoning strength of the dollar.
Dealers said macroeconomic concerns, which include a cooling Chinese economy, were helping fuel the fall in commodities. "We are in a deep phase of lack of confidence concerning the world's economy. Macroeconomic factors will guide grain markets and could hush up the weather market," one trader said.
Dry weather in western Europe had been helping to underpin wheat prices. French analyst Strategie Grains on Thursday cut its forecast for this year's soft wheat crop in the European Union by 3.6 million tonnes to 131.5 million tonnes, mainly due to the impact of drought in the west of the bloc.
Selling was also fuelled by a report issued by the US Department of Agriculture on Wednesday which included a higher than expected estimate for US corn ending stocks due to reduced export demand. Chicago Board of Trade July corn fell 2.2 percent to $6.62-1/2 a bushel by 1141 GMT, near the day's low of $6.62-1/4 a bushel, the weakest prices for the contract since March 18.
"USDA was a contributing factor to the very large selloff that we saw in agricultural markets," said Luke Mathews, an agricultural commodities strategist at Commonwealth Bank of Australia. "It was a more bearish report than what the market was expecting with respect to corn in particular."
Commerzbank, in a market note on Thursday, noted, however, that US corn inventories would still be at a low level and USDA forecasts for corn acreage and yield may be "optimistic" given planting delays. "The USDA's current forecast is therefore likely to be the best possible scenario and downward revisions are quite likely in the coming months," Commerzbank said.
Analysts cautioned that the weather will be key in determining production of corn and soyabeans, planting of which has been delayed in the world's top exporter, the United States, following excessive rains. "What we are looking at within the ags space is that inventories for corn, soyabean, cotton and sugar remain extremely tight and any production hiccups in the coming 12-18 month will certainly have a bullish impact on prices," said Mathews.
"We are not through the worst of it." CBOT July soyabeans fell 0.9 percent to $13.20 a bushel while wheat prices also fell with CBOT July off 2.0 percent to $7.44 a bushel. USDA's forecast for the US winter wheat crop was larger than trade estimates but would still be the smallest in five years after a drought in the southern US Plains. November wheat in Paris slipped 2.2 percent to 222.00 euros a tonne.