U.S. grains: Corn sags as forecast rains trigger long liquidation

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters –– U.S. corn futures fell nearly four per cent on Monday and soybeans also weakened on forecasts calling for much-needed rains in the U.S. Midwest, traders said.

Wheat was pulled lower by corn and soy while remaining under pressure from progress in the U.S. winter wheat harvest.

At the Chicago Board of Trade, July corn settled down 16-1/2 cents at $4.21-1/4 per bushel (all figures US$).

July soybeans ended down 16 cents at $11.43-1/2 a bushel and July wheat fell 8-1/4 cents at $4.73 a bushel.

Corn posted the biggest percentage declines, in part because it is seen as the most likely to benefit from rains this week. Corn in the heart of the U.S. Midwest is nearing its crucial pollination stage, which typically takes place in July. For soybeans, the key month is August.

“Most (weather) models this morning are calling for widespread rains across the Corn Belt in the next three to five days. What is more important is that the rains are forecast for the driest regions,” Karl Setzer, analyst with the Iowa-based MaxYield Cooperative, said in a research note.

After the CBOT close, the U.S. Department of Agriculture’s weekly crop progress report rated 75 per cent of the corn crop in good to excellent condition, unchanged from the previous week. Analysts surveyed by Reuters had expected a decline after a hot week in the Midwest.

USDA rated 73 per cent of U.S. soybeans as good to excellent, down from 74 per cent a week earlier and in line with trade expectations.

Commodity funds hold large net long positions in CBOT corn and soybeans, leaving those markets vulnerable to long liquidation. The supplement to the U.S. Commodity Futures Trading Commission’s weekly Commitment of Traders report showed non-commercial traders as of June 14 held the biggest net long positions in CBOT corn and soy futures since August 2012.

“Rains forecast on the Corn Belt should weigh on the market again, in a context where funds remain very long of soybean and corn, pushing them to profit-taking,” the Agritel consultancy said in a market note.

CBOT wheat followed the weaker trend, although the market drew underlying support from a weaker dollar, which makes U.S. grains more attractive on the world market.

The U.S. dollar index fell and sterling surged after opinion polls swung in favour of the campaign for Britain to stay in the European Union.

— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Melanie Burton in Melbourne and Gus Trompiz in Paris.

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