U.S. grains: Corn falls two per cent ahead of monthly USDA report

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — U.S. corn futures fell about two per cent on Monday to the lowest level since mid-April, pressured by broad weakness in commodities and positioning a day ahead of a monthly U.S. Department of Agriculture report, analysts said.

Soybean and wheat futures also fell.

At the Chicago Board of Trade, most-active July corn settled down 8-1/2 cents at $3.69 per bushel after dipping to $3.68-1/4, its lowest since April 13 (all figures US$).

July soybeans ended down 8-1/4 cents at $10.26-1/2 a bushel and July wheat fell 7-1/4 cents at $4.56-1/2 a bushel.

Corn posted the biggest percentage declines as traders awaited USDA’s monthly reports on Tuesday, including the government’s first official supply-and-demand tables for the 2016-17 marketing year.

Analysts surveyed by Reuters expect the USDA to project U.S. corn stocks will balloon above 2.2 billion bushels by the end of 2016-17, which would be the most since 1987-88.

“Speculative hedge funds leaning to the long side for corn and soybeans are squaring positions to hedge against a potential surprise in the report. Broader weakness in the commodity sector amplifies those losses,” Arlan Suderman, chief commodities analyst for INTL FCStone, wrote in a note to clients.

Soybeans were pressured in part by weak economic data from China, the top global soy buyer. China’s exports and imports fell more than expected in April, cooling hopes of a recovery in the world’s second-largest economy.

However, customs data also showed that China imported 7.07 million tonnes of soybeans in April, up 15.9 per cent from 6.10 million tonnes in March.

Some soy traders noted weakness in Brazil’s currency, the real, which fell as much as five per cent on political uncertainty. Brazil and the U.S. are the world’s top soy exporters, and a softer real in theory makes Brazilian soy more competitive.

Wheat followed the weaker trend on the grains floor. Analysts expect USDA’s reports on Tuesday to project rising U.S. and global wheat supplies for 2016-17.

USDA has projected world wheat stocks to reach an all-time high by the end of 2015-16, and analysts surveyed by Reuters expect stocks to swell further by the end of 2016-17.

Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Sybille de La Hamaide in Paris and Naveen Thukral in Singapore.

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