US wheat
futures plunged 4.7 percent on Friday for their worst daily loss since January
and their biggest weekly loss in nearly a year, as investors fled risky assets
amid slowing global economies and lower-than-expected job growth in the United
States.
The advancing US winter wheat harvest also pressured futures, with Chicago Board of Trade July wheat shedding 31-1/2 cents to $6.12-1/4 per bushel, a two-week low. CBOT July corn lost 3-3/4 cents, closing at $5.51-1/2, the lowest settlement in about 1-1/2 years. Corn earlier rose as much as 3 percent as traders covered short positions a day after futures notched their worst monthly performance in eight months.
But corn gave up all its gains and soybean futures also came off their highs as stock and commodities markets deepened losses. CBOT July soybeans ended up 4-1/4 cents at $13.44-1/4 after rising as high as $13.57-1/4. Corn lost 4.5 percent for the week while soybeans declined about 3 percent. Wheat fell 9.7 percent for the week, the worst since the week ended June 19, 2011.
"There were rumours of China buying (corn) but no follow-through and it wasn't able to hold the gains. Then came the new lows in equities and crude oil, and traders jumped right back out again," said Mike Zuzolo, analyst at Global Commodities Analytics. Despite the drop in CBOT corn futures, exporters in Brazil and Ukraine are offering cheaper shipments than the United States, traders said.
The sharp price drop also makes it more attractive than wheat as animal feed - and that weighed on wheat prices - while some farmers were reporting good yields early in the harvest in the No 1 US wheat state Kansas. "Wheat got smoked once again as it is in the process of re-pricing itself as a feedstuff against the corn," ABN Amro analyst Charlie Sernatinger said in a note to clients.
Grain futures tracked losses in many other commodities, with the Thomson Reuters-Jefferies CRB index of 19 commodities shedding about 1.7 percent amid the debt crisis in the euro zone and lower-than-expected job growth in the United States. Early on Friday, corn benefited from bargain buying while largely dry conditions in the US Corn Belt capped losses in new-crop contracts for both corn and soybeans. The greenback had surged to a 16-month peak amid a steady drum beat of negative news in Europe, which made commodities priced in the dollar less attractive to importers. But the US currency pared gains and turned lower.
However, export demand remains lacklustre. The US Agriculture Department early Friday pegged US corn export sales last week at the lowest in nine weeks, wheat exports the lowest in five months and soy sales the lowest in four months - with each result coming in lower than analysts' estimates.
"There have been rumours of China buying which are not confirmed by any exporter," said AgResource Co analyst Dan Basse of Friday's rumours. "I talked to three major exporters and they had not heard anything; I am dubious about it all." World stocks dipped anew while safe-haven government debt yields dropped to record lows on worries about the Chinese economy and Spain's parlous finances. US job growth braked sharply in May and the unemployment rate rose for the first time since June, putting pressure on the Federal Reserve to ease monetary policy further to shore up a sputtering recovery.
The advancing US winter wheat harvest also pressured futures, with Chicago Board of Trade July wheat shedding 31-1/2 cents to $6.12-1/4 per bushel, a two-week low. CBOT July corn lost 3-3/4 cents, closing at $5.51-1/2, the lowest settlement in about 1-1/2 years. Corn earlier rose as much as 3 percent as traders covered short positions a day after futures notched their worst monthly performance in eight months.
But corn gave up all its gains and soybean futures also came off their highs as stock and commodities markets deepened losses. CBOT July soybeans ended up 4-1/4 cents at $13.44-1/4 after rising as high as $13.57-1/4. Corn lost 4.5 percent for the week while soybeans declined about 3 percent. Wheat fell 9.7 percent for the week, the worst since the week ended June 19, 2011.
"There were rumours of China buying (corn) but no follow-through and it wasn't able to hold the gains. Then came the new lows in equities and crude oil, and traders jumped right back out again," said Mike Zuzolo, analyst at Global Commodities Analytics. Despite the drop in CBOT corn futures, exporters in Brazil and Ukraine are offering cheaper shipments than the United States, traders said.
The sharp price drop also makes it more attractive than wheat as animal feed - and that weighed on wheat prices - while some farmers were reporting good yields early in the harvest in the No 1 US wheat state Kansas. "Wheat got smoked once again as it is in the process of re-pricing itself as a feedstuff against the corn," ABN Amro analyst Charlie Sernatinger said in a note to clients.
Grain futures tracked losses in many other commodities, with the Thomson Reuters-Jefferies CRB index of 19 commodities shedding about 1.7 percent amid the debt crisis in the euro zone and lower-than-expected job growth in the United States. Early on Friday, corn benefited from bargain buying while largely dry conditions in the US Corn Belt capped losses in new-crop contracts for both corn and soybeans. The greenback had surged to a 16-month peak amid a steady drum beat of negative news in Europe, which made commodities priced in the dollar less attractive to importers. But the US currency pared gains and turned lower.
However, export demand remains lacklustre. The US Agriculture Department early Friday pegged US corn export sales last week at the lowest in nine weeks, wheat exports the lowest in five months and soy sales the lowest in four months - with each result coming in lower than analysts' estimates.
"There have been rumours of China buying which are not confirmed by any exporter," said AgResource Co analyst Dan Basse of Friday's rumours. "I talked to three major exporters and they had not heard anything; I am dubious about it all." World stocks dipped anew while safe-haven government debt yields dropped to record lows on worries about the Chinese economy and Spain's parlous finances. US job growth braked sharply in May and the unemployment rate rose for the first time since June, putting pressure on the Federal Reserve to ease monetary policy further to shore up a sputtering recovery.
Copyright Reuters,
2012
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