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Markets

Corn hits 8-year high as dry weather in Brazil raises supply concerns

  • Large speculators cut their net long position in CBOT corn futures in the week to April 27, regulatory data released on Friday showed.
Published May 3, 2021

SINGAPORE: Chicago corn futures rose for a third consecutive session on Monday to hit their highest since March 2013 as dry weather in Brazil raised concerns about global supplies. Wheat extended gains into a third session, while soybeans rose for a second straight day.

"There are big issues for Brazil corn crop which is suffering due to lack of rains," a Singapore-based feed grains trader said. "Wheat is tracking gains in corn as it is used as a substitute for corn in animal feed."

The most-active corn contract on the Chicago Board of Trade (CBOT) rose 2.2% to $6.88-1/4 a bushel by 0314 GMT, hovering near the session high of $6.98 a bushel - the highest since March 2013.

"Brazil's weather continues to provide support for the price gains.

A material chunk of Brazil's second corn crop sits in drying soils," said Tobin Gorey, director of agricultural strategy, Commonwealth Bank of Australia.

Brazil's 2020/2021 total corn crop estimate was lowered by almost 8% to 104.1 million tonnes as dry weather is affecting yields of the country's second corn plantings, forecaster Safras & Mercado said on Friday.

The overall production forecast was affected by a cut of some 10 million tonnes of Brazil's second corn forecast, now expected to be 70.7 million tonnes, according to Safras.

Soybeans rose 0.8% to $15.47 a bushel, after closing 2.1% higher in the previous session, while wheat climbed 1.6% to $7.46-1/4 a bushel, after closing up 0.8% on Friday.

On the technical front, corn may test a resistance at $7.21-1/2, a break above which could lead to a gain into the $7.75-1/2 to $8.49 range, according to Wang Tao, a Reuters analyst for commodities technicals.

The condition of French wheat and barley declined sharply in the week ended April 26, data from farm office FranceAgriMer showed, suggesting a growing impact from dry, cold weather this month.

Large speculators cut their net long position in CBOT corn futures in the week to April 27, regulatory data released on Friday showed.

The Commodity Futures Trading Commission's weekly commitments of traders report also showed that non-commercial traders, a category that includes hedge funds, trimmed their net short position in CBOT wheat and raised their net long position in soybeans.

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