SINGAPORE: Chicago corn gained ground on Monday, with prices underpinned by short-covering after the market dropped to its lowest level in more than three years last week, weighed down by ample world supplies and expectations of a bumper harvest in South America.
Soybeans rose for the first time in four sessions, while wheat recouped some of the last session’s losses.
“Framers are holding large stocks of corn and they will be selling in the market,” said one Singapore-based grains trader. “Prices are likely to come under further pressure.”
The most-active corn contract on the Chicago Board of Trade (CBOT) rose 0.3% to $4.14-3/4 a bushel, as of 0335 GMT, having dropped to its lowest since November 2020 last week.
Soybeans added 0.3% to $11.45 a bushel and wheat gained 0.5% at $5.71-3/4 a bushel.
Larger inventories of corn, mainly used to feed animals and as a biofuel, are providing headwinds to prices, which have dropped almost 12% so far in 2024.
U.S. farmers held a whopping 7.83 billion bushels of corn in storage bins on their farms as of Dec. 1, the most ever for that date and up 16% from a nine-year low in December 2022, according to U.S. government data.
Corn, soybeans recover from 3-year lows; ample supply caps gains
Globally, leftover inventories are projected to reach a five-year high by September after accounting for all the corn used to feed livestock, make biofuels and other purposes.
The steep decline in prices this year is hitting farmers worldwide, especially those who are on track to harvest in the months ahead.
A highly anticipated record corn harvest in Argentina could see its benefits curbed by a global decline in prices, the country’s Rosario grains exchange said on Friday, in a possible blow to a new government battling the economy’s worst crisis in decades.
Corn exports from Argentina, the world’s third biggest supplier, are expected to rise 53% compared to the last season, thanks to ample rainfall favouring the harvest estimated at a record 57 million metric tons.
Ample global supplies of soybeans and wheat have also pressured prices.
Large speculators increased their net short position in CBOT corn futures in the week to Feb. 20, regulatory data released on Friday showed.
The Commodity Futures Trading Commission’s weekly commitments of traders report also showed that non-commercial traders, a category that includes hedge funds, increased their net short position in CBOT wheat and trimmed their net short position in soybeans.
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