Chicago | Reuters — A rally in Chicago corn futures on Tuesday that was buoyed by a run-up in the energy market sputtered by day’s end as crude oil prices slipped. May corn futures climbed nearly two per cent in mid-day trading, but cut gains in half as crude oil prices closed down for a second straight day.
Tuesday was the first day of positive movement in corn after seven days of losses that saw prices plunge to 3-1/2-year lows.
Soybean futures settled nearly flat as reports of dryness in Argentina trimming soybean yields were counteracted by a lagging soymeal market.
Wheat futures dropped after the U.S. Department of Agriculture (USDA) assessed the U.S. crop to be in better condition than analysts forecasted.
Grain markets also saw some short-covering ahead of Thursday’s world agriculture supply and demand estimates (WASDE) report, according to Don Roose, president of U.S. Commodities in West Des Moines, Iowa.
“For every seller, we have a buyer and vice-versa,” Roose said. “But the reality is, we have too much grain in the U.S. now, and we have a crop coming at us that’s going into the ground without much trouble, so far. You can’t put lipstick on that pig. So how are we going to deal with it?”
Concerns over reduced demand for the grain-based fuel ethanol in the economic fallout from the novel coronavirus crisis also kept corn from a stronger rally.
“Crude oil really sold off later in the day,” said Mike Seery, president of Seery Futures. “You have the coronavirus, 97 million acres, no one’s driving — you really couldn’t have a worse technical or fundamental picture for corn, maybe ever.”
Chicago Board of Trade most-active corn contract settled up 3-3/4 cents at $3.31-1/2 a bushel at the close (all figures US$).
Soybeans lost 3/4 cent to close at $8.54-3/4 a bushel. Wheat fell 6-1/2 cents to $5.49-1/4 a bushel.
In its first weekly crop rating report for 2020, USDA said Monday that 62 per cent of U.S. winter wheat crops were in good-to-excellent condition, up from 60 per cent this time last year.
Analysts expected only 56 per cent of winter wheat to be good-to-excellent.
A potential cold snap in the U.S. next week offered the wheat market some stability.
“There’s always that threat that we could have some sort of killing frost or something,” said Hoops. “That’s why we’re not down harder off these crop condition ratings.”
— Reporting for Reuters by Christopher Walljasper in Chicago; additional reporting by P.J. Huffstutter, Michael Hogan and Naveen Thukral.