U.S. grains: Corn, soy sag on long liquidation

(Allan Dawson photo)

Chicago | Reuters — U.S. corn and soybean futures declined on Friday in a sometimes-volatile session as shifting weather forecasts for the Corn Belt prompted traders to liquidate long positions, analysts said.

Wheat futures also fell, following corn and soybeans.

At the Chicago Board of Trade, most-active December corn settled down 6-1/2 cents at $3.58-1/4 per bushel (all figures US$). November soybeans ended down 5 cents at $10.57-1/4 a bushel and September wheat fell 9-1/4 cents, to $4.24-3/4 a bushel.

December corn ended the week down 1.2 per cent, its fourth straight weekly setback.

Corn and soy prices rose sharply earlier this week on forecasts for an extended period of scorching temperatures, but then retreated on Thursday as revised weather outlooks were less threatening to crops.

“Some traders didn’t want to go home with a position this weekend, not knowing what is going to happen,” said Terry Reilly, analyst with Futures International in Chicago.

“People just got out of long positions and decided to call it a day,” he said.

After the CBOT close, weekly data from the U.S. Commodity Futures Commission showed noncommercial traders slashed their net long position in CBOT corn to 14,216 contracts in the week to July 12, down nearly 93,000 contracts from the previous week.

“The sheer drawdown is bullish,” said Jim Sullivan with the Leese Trading Group, noting that funds have more room to extend their net long if weekend weather forecasts turn hotter and drier.

Corn in the heart of the Midwest is pollinating, a crucial phase in determining yield. Hot and dry conditions during pollination can cut yield prospects.

August is the key month for soybeans, but the potential for a late July heat wave to persist into next month has kept the soy market on edge.

Lower production in South America, particularly Argentina, has heightened the importance of this year’s U.S. soybean crop.

“With a tight balance sheet following crop losses in South America, a big U.S. harvest is needed. Any yield loss will cause a further tightness in supply,” said Jonathan Lane, trading director with UK merchant Gleadell.

CBOT September wheat ended the week down more than two per cent, its fourth decline in the last five weeks, as the market reacts to the ongoing U.S. harvest of a larger-than-expected winter wheat crop and projected record-large global ending stocks.

— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Nigel Hunt in London and Naveen Thukral in Singapore.

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