SINGAPORE - U.S. corn futures dropped 0.7 percent on Monday, extending losses to a three-week low on forecasts of favourable harvest weather in the U.S. Midwest amid weakness in the Asian stock markets. The outlook for the Midwest calls for dry weather through Thursday, giving farmers a window to pick up harvest activities that have been pushed well behind schedule due to soggy fields and late sowing.
“The next 10 to 14 days in the Midwest corn belt we are going to see fairly clear skies and pretty limited rainfall, which will be definitely conducive to farmers getting their crops harvested,” said Toby Hassall, an analyst with Commodity Warrants Australia. “And if you see more weakness in equities and strength in the dollar, then we will see more losses in grains.”
Asian stocks slid on Monday, with Seoul hitting a two-month low after a sell-off in banking shares slammed Wall Street, a slide viewed as a sign that investors were losing faith in the economic recovery.
The yen rose to two-week highs while the U.S. dollar clung to gains as jittery investors cut back long positions in growth-linked currencies. A stronger dollar makes U.S. commodities uncompetitive in the global market.
The combination of the delayed harvest and the weak dollar has supported grain and soy prices throughout October, a month when the market typically falls, as grain elevators and processors are flooded with supplies from harvest.
Chicago Board of Trade corn futures tumbled nearly 8 percent last week and soybeans fell about 3 percent, although the markets registered gains for the month of October on harvest delays.
The market is eyeing crop forecasts to be issued by two private forecasters next week, FC Stone and Informa Economics, which should give price direction.
On Monday, CBOT corn for December delivery fell 0.7 percent to $3.63-½ a bushel by 0359 GMT, after settling 3.6 percent lower on Friday, while November soybeans fell 0.03 percent to $9.77-3/4.
The soy market is shifting focus towards South America, where sowing is progressing rapidly and a rebound in region’s soybean production could drag down prices further.
Brazilian soybean producers planted 20 percent of the new crop, which is seen at 64.7 million tonnes, by the week ending Oct. 23, up from 16 percent sown by this week last year, analysts Celeres said.
“You might see a generally weak tone in the soybean and grain markets if we do see a big response by growers in South America,” said Hassall. “We could see soybeans give away a couple of dollars.”
Wheat, which has been under pressure from growing global supplies and poor U.S. exports, fell on Monday. December wheat eased 0.1 cent to 4.93-¾ a bushel.
