Corn futures fall as big South American exports loom

22.12.2016

Chicago corn futures fell for the fifth straight session, under pressure from the prospect of stiff South American completion in the export markets, but soybean futures managed a bounce after a sharp sell-off.

Tregg Cronin, at Halo Commodities, noted "growing corn supply estimates from South America".

"While the first corn supplies will be off at the end of the month or the beginning of January, much of the first crop corn will be going to refill depleted domestic stocks after last year's short crop."

"When we look at the combined corn balance sheet for Argentina and Brazil, we see production of 123m tonnes which would be up from 97.5m tonnes last year and the largest on record by 10m tonnes," Mr Cronin said.

"The increase in supply and exports in South America will have to be weighed against potential exports from the US in 2017-18 as competition should be much more intense than it was in 2015-16 when the US was the only game in town," Mr Cronin said.

'Lack of fresh news'

And there is little else to support prices.

"Lack of fresh news is keeping corn in a rut," said CHS Hedging.

"Any fresh news is scant leaving markets to trade South American weather and shifting demand," said Kim Rugel, at Benson Quinn Commodities.

March corn futures settled down 0.8%, at $3.47 Ѕ a bushel.

Slow demand

Wheat futures also slumped for the third straight session.

Richard Feltes, at R.J. O'Brien ascribed the weakness to the "overall slow pace of global wheat demand in closing days of 2016".

March Chicago wheat futures settled down 0.9%, at $3.99 ѕ a bushel.

Questions over Chinese soybean demand

Soybean futures found some traction, helped by the US Department of Agriculture reporting a sale of 132,000 tonnes of beans to China for.

But investors were downbeat on prospects for Chinese soybean demand to come.

"Despite the purchase announcement this morning, the Chinese interest in US soybeans has been slow recently," said Darrell Holaday at Country Futures.

"They are pricing a lot of soybeans that they have already contracted, but the new business has slowed as was expected."

"The Chinese New Year is in late January and most feel they have booked their needs through the beginning of that big Chinese holiday period," said.

Ms Rugel also warned of slower purchases to come.

"While US soybean demand has remained active of late, China will start to slow US purchases with most covered in to Lunar New Year, which is 5-weeks away."

Prices bounce

Still, prices were able to bounce, after a sharp sell-off.

"Beans seemed to have found a bottom here this morning with technicals oversold after plunging lower in the last two trading sessions," said Ms Rugel.

January soybean futures settled up 0.3%, at $10.08 ј a bushel.

Sugar market pressure

March raw sugar futures settled lower, under pressure from weak Chinese demand.

November Chinese sugar imports in were down 48% year on year, according to custom data.

And Gasc, Egypt's state commodity buyer, cancelled a tender for 50,000 tonnes of white sugar, after receiving only one offer.

March raw sugar settled down 0.3%, at 18.2 a pound.

March white sugar futures settled down 0.2% $491.80 a tonne.


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