US grain and soybean prices retreated from early strong grains on Monday as oil prices eased and Asian share markets suffered steep declines, dogged by fears of deep global recession. Soybeans managed to remain in positive territory, supported by harvest delays in the US and still strong demand.
Chicago Board of Trade soybean futures for November delivery rose 0.81 percent to $8.70-3/4 per bushel by 0632 GMT after being more than 2 percent higher earlier in the day. December corn eased 0.2 percent to $3.72 per bushel and wheat for December delivery lost 0.92 percent to $5.11-1/2 per bushel. Corn and soybeans dipped to near one-year lows on Friday while wheat hit a 16-month low.
"In the short to medium term, while such uncertainty pervades markets it is unlikely that commodities and grains will be unable to escape the market's wrath," said Richard Koch, a director at private farmer consultancy ProFarmer.
Koch said if US government measures to restore financial stability were effective then soft commodities should start a long grind higher. "It may take a significant supply shock, commodity index fund re-engineering or a period of time for investors to regroup before soft commodities are able to detach from the trend in commodities generally," said Koch.
Toby Hassall, an analyst at Commodity Warrants Australia, said concerns that a weakening global economy would curb demand for commodities were over-riding other fundamentals in commodity markets. "If you take stock markets as a proxy for the health of the global demand picture then it would seem to suggest more weakness across the board in commodities."
November is fast approaching and not even half the US crop is out of the fields. Chicago traders expect the USDA to report in its weekly update on Monday that roughly 40 percent of US corn is harvested, versus the seasonal average of around 70 percent by late October.
A downward revision in the size of Australia's 2008/09 wheat crop to as low as 19 million tonnes by private consultancy Australian Crop Forecasters, from a previous forecast of 20 million tonnes a week ago, failed to stop wheat from easing. "A big world crop has pulled the price back from the records we saw earlier this year and if you add to that equation the deteriorating demand situation then that would point to lower prices," said Hassall
He said corn and soybean prices were under downward pressure as biofuel producers were likely to cut output as the oil price fell due to weak demand. "When crude prices slide, all of a sudden the biofuel will sell for less and demand for inputs like soy and corn will contract as result," said Hassall.
Crude oil prices eased further after a near $4 per barrel fall on Friday when global recession worries outweighed a decision by Opec at an emergency meeting to cut production by 1.5 million barrels per day. NYMEX light crude for December delivery was down 1.04 percent at $63.88 a barrel.
Comments
Comments are closed.