Saturday, 23 June 2012

US grains fall

US corn, soya and wheat futures fell on Thursday as profit-taking and concerns about a slowdown in global economic growth overshadowed worries about dry weather threatening US crop prospects. Grains and other commodities weakened after data showed Chinese, European and US manufacturing activity slowing further and risk aversion swept across financial markets.

Grains "would be up double-digits if it were not for the outside markets, specifically the crude oil market and this 'risk-off' mindset," said Mike Zuzolo, president of Global Commodity Analytics in Lafayette, Indiana. Business activity across the euro zone shrank in June for a fifth straight month, and Chinese manufacturing contracted, while weaker overseas demand slowed US factory growth, surveys showed. The HSBC Flash Purchasing Managers Index, the earliest monthly indicator of China's industrial activity, fell to a seven-month low of 48.1 in June from 48.4 in May.

"We've had several piece of economic news that would say we are slowing down. So the fund mindset right now is, 'why buy grains,' even though the weather says you should be buying them," Zuzolo said. At the Chicago Board of Trade, July corn fell 25-1/4 cents, or 4 percent, its biggest decline in a month, to settle at $5.86-1/2 per bushel. Most-active December ended down 16-1/2 cents at $5.50.

July wheat ended down 2-1/4 cents at $6.61-3/4 per bushel. July soyabeans fell 8 cents at $14.38-1/2 a bushel while new-crop November ended down 24-1/4 cents at $13.71-1/4.Along with the economic worries, nearby corn was pressured by softer cash markets. Two ethanol plants in Nebraska were temporarily idled in recent days due to poor profit margins, and on Thursday the spot basis bid for corn at Decatur, Illinois, a key processing site, fell sharply, reflecting slowing demand.

As well, weekly corn export data fell below trade expectations. The US Department of Agriculture reported export sales of US corn in the latest week at 381,000 tonnes, including sales for the current and new marketing years. The figure fell below trade estimates for sales of 450,000 to 650,000 tonnes. Traders set aside worries about dry crop weather that supported the market this week, as temperatures cooled slightly and rain fell in parts of Illinois. However, an updated long-term forecast from the National Oceanic and Atmospheric Administration indicated above-normal temperatures across most of the Midwest through July.

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