U.S. grains: Corn falls as rally triggers farmer selling

Chicago | Reuters — U.S. corn futures closed lower on Wednesday after a choppy session as the market’s rally to the highest levels in nearly six months triggered profit-taking and farmer selling, traders said.

Wheat slipped from a near three-month high, but worries about political turmoil in Ukraine, a major grain exporter, as well as about dry weather threatening prospects in the U.S. Plains and Australia, underpinned values.

Soybeans ended mostly lower after China, the world’s largest buyer of the oilseed, cancelled some purchases of U.S. soy.

At the Chicago Board of Trade, most-active May corn settled 2-1/4 cents lower at $4.82 per bushel (all figures US$). May soybeans ended down 2-1/2 cents at $14.20-1/2 a bushel and May wheat fell one cent at $6.42-1/2 a bushel.

CBOT May oats closed down at their 20-cent daily limit on technical selling and profit-taking after a month-long rally tied to rail backlogs in Canada, a major oats exporter.

Front-month March corn retreated after reaching $4.81 a bushel, the highest spot price since mid-September, buoyed by export demand for U.S. supplies and worries about political unrest in Ukraine, the world’s No. 3 corn exporter.

Chart-based buying added support as both the March and May corn contracts held above their respective 200-day moving averages.

But values retreated by the close. U.S. farmers have been aggressively selling their record-large 2013 harvest this week, taking advantage of the rally, while commodity funds have been buyers, boosting open interest in CBOT corn this week.

“The funds appear like they are in a mad dash to get some long positions on ahead of the growing season. We have this huge change in ownership,” said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

“The funds are entering the market and the farmers are selling cash positions,” Roose said.

Wheat set back

May wheat eased but remained just below the prior session’s near three-month high, underpinned by crop concerns in the southern U.S. Plains as well as political turmoil in Ukraine.

“It’s a very fluid situation that we currently have in the Black Sea region. Events over there in the coming few days, whichever way they unfold, will certainly have an impact on global corn and wheat prices in particular,” said Luke Mathews, a commodities strategist at Commonwealth Bank of Australia.

Foreign trading houses have shunned new grain export contracts due to continued tensions between Ukraine and Russia, Ukraine’s agriculture minister said Wednesday.

The U.S. Grains Council said grain shipments from Ukraine are “becoming increasingly difficult,” although ports are open and vessels are loading.

Soy falters after China cancels purchases

Soybeans fell after the U.S. Department of Agriculture said private exporters reported the cancellation of 245,000 tonnes of U.S. soybeans sold earlier to China for delivery in the 2013-14 marketing year begun Sept. 1.

“We did have the cancellation here this morning by (China). That put the brakes on,” Roose said.

Export sales commitments of U.S. soybeans have already outpaced the USDA’s 2013-14 export forecast of 1.51 billion bushels, a factor that threatens to draw down 2013-14 soy ending stocks below the government’s forecast of 150 million bushels.

That demand helped lift CBOT soybean futures by 10 per cent in February, above $14 a bushel.

With the harvest of a likely bumper South American soy crop underway, traders expect to see more cancellations of U.S. soy.

“This is the start of something. They (China) have a lot of bean purchases that are probably going to be rolled or cancelled or switched to another origin,” Roose said.

But soybeans pared losses as traders adjusted positions ahead of USDA’s next monthly supply/demand report, due March 10.

“The technicals are holding up because they (traders) want to see what USDA has to say about U.S. ending stocks and how much they trim South American production,” said Mike Zuzolo of Global Commodity Analytics in Atchison, Kan.

— Julie Ingwersen is a Reuters correspondent covering ag commodity markets in Chicago. Additional reporting for Reuters by Nigel Hunt in London and Lewa Pardomuan in Singapore.

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