19th Jul 2012, by Agrimoney
Rumours of Chinese selling pulled the rug from under corn prices despite prospects for continued US drought, which helped soybeans hold on to strong gains.
Chicago corn futures remained in positive territory in late deals, with the September contract, up 0.8% at $8.01 a bushel, on track for the highest close ever for a spot contract.
However, it was well below the record intraday high of $8.16 ¾ a bushel reached earlier.
And it contrasted with rise of 3% in August soybeans, to $17.31 a bushel, keeping them 1% or so from their own record high, for a benchmark contract, reached earlier.
'$2-a-bushel turn'
Corn's underperformance followed talk that China, which earlier in the week was rumoured to be taking profits on soybean purchases, had begun to sell some of the 2m tonnes of corn it has purchased from the US, but has not yet been exported.
"Apparently, they are selling-on some corn," Jerry Gidel, feed grains analyst at broker Rice Dairy, told Agrimoney.com.
With China famous for buying earlier in the season when prices fell below $6 a bushel, this trade offered "a $2 turn".
Export data showing US corn sales of 180,000 tonnes for the latest week, well below forecasts, also tarnished investor sentiment.
Drought to get worse?
The pull back in corn came despite official US meteorologists forecasting above-average temperatures next month in most of the contiguous 48 US states, and below-average rainfall in the Midwest.
Trends indicate a "greater chance that there is no relief possible or in sight", to the drought, said Dan Collins, monthly forecaster at National Oceanic and Atmospheric Administration's Climate Prediction Center.
Already 70% of the Midwest is in some stage of drought, up from 63% last week, and 1.9% a year ago, official data showed.
Half of the Midwest was in a drought rated severe or exceptional, compared with 33% last week and 0% a year ago.
'Worse than 1988'
On some measures, the drought now rated worse than that of 1988, the worst for yield loss in recent history, according to Gail Martell at Martell Crop Projections.
"Growing degree day accumulations this season, April to mid-July, reached 1661 and 30% above normal," she said.
"Conditions were hot also in 1988, but not as extreme. The 1988 heat units accumulated to 1629 and 25% above normal from April to mid-July."
Rumours of Chinese selling pulled the rug from under corn prices despite prospects for continued US drought, which helped soybeans hold on to strong gains.
Chicago corn futures remained in positive territory in late deals, with the September contract, up 0.8% at $8.01 a bushel, on track for the highest close ever for a spot contract.
However, it was well below the record intraday high of $8.16 ¾ a bushel reached earlier.
And it contrasted with rise of 3% in August soybeans, to $17.31 a bushel, keeping them 1% or so from their own record high, for a benchmark contract, reached earlier.
'$2-a-bushel turn'
Corn's underperformance followed talk that China, which earlier in the week was rumoured to be taking profits on soybean purchases, had begun to sell some of the 2m tonnes of corn it has purchased from the US, but has not yet been exported.
"Apparently, they are selling-on some corn," Jerry Gidel, feed grains analyst at broker Rice Dairy, told Agrimoney.com.
With China famous for buying earlier in the season when prices fell below $6 a bushel, this trade offered "a $2 turn".
Export data showing US corn sales of 180,000 tonnes for the latest week, well below forecasts, also tarnished investor sentiment.
Drought to get worse?
The pull back in corn came despite official US meteorologists forecasting above-average temperatures next month in most of the contiguous 48 US states, and below-average rainfall in the Midwest.
Trends indicate a "greater chance that there is no relief possible or in sight", to the drought, said Dan Collins, monthly forecaster at National Oceanic and Atmospheric Administration's Climate Prediction Center.
Already 70% of the Midwest is in some stage of drought, up from 63% last week, and 1.9% a year ago, official data showed.
Half of the Midwest was in a drought rated severe or exceptional, compared with 33% last week and 0% a year ago.
'Worse than 1988'
On some measures, the drought now rated worse than that of 1988, the worst for yield loss in recent history, according to Gail Martell at Martell Crop Projections.
"Growing degree day accumulations this season, April to mid-July, reached 1661 and 30% above normal," she said.
"Conditions were hot also in 1988, but not as extreme. The 1988 heat units accumulated to 1629 and 25% above normal from April to mid-July."
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