Chicago soyabean futures slid more than 1 percent on Monday as US farmers geared up to harvest a record crop, while corn ticked lower as fears of crop-damaging frost faded. Wheat rose half a percent, following a drop of five percent in the previous session to a two-week low on fears that a US regulatory plan to alter storage charges for wheat delivered against Chicago Board of Trade futures could drive off large speculators.
Analysts said the grain markets would probably remain under pressure as expectations of a record soyabean crop and second largest corn output in the United States seem more of a reality with each passing week, given the near-perfect weather.
"Without the frost over the weekend or in the coming week, I don't think the market can rally; rather, the market is likely to head lower from here as harvests progress," said Genichiro Higaki, head of the proprietary fund management team at Sumitomo Corp in Tokyo. "And we are not so concerned about the frost; even if crop-damaging frost really hits the northern areas, the impact on total yields will be limited."
Chicago Board of Trade November soyabeans fell 1.2 percent to $9.15 a bushel by 0618 GMT, while December corn futures fell 0.3 percent to $3.33 a bushel. Corn rose 5 percent last week in its best performance in eight weeks on forecasts of frost damaging crops. On Friday, the soyabean market was supported by concerns that rain in the US Midwest and Mid-South were stalling the early harvest.
Heavy rains belted parts of central Iowa and southern Indiana in the past day, and the Mississippi River Delta has been wet for more than two weeks. But forecaster DTN Meteorlogix predicted mostly dry conditions with possibilities of thunderstorms on Friday in some areas.
"Dry conditions on Wednesday, mostly dry Thursday except for showers developing far west late in the day, mostly dry east," DTN Meteorlogix said in its latest forecast for the US Midwest soyabean crop. "Showers and thunderstorms west to central areas on Friday."
CBOT wheat for December delivery rose 0.6 percent to $4.52-3/4 a bushel, after falling 4.9 percent on Friday. A subcommittee of the US Commodity Futures Trading Commission this week recommended a system of variable storage rates as a way to help CBOT wheat futures match cash prices more closely at futures expiration.
The lack of cash and futures price convergence has been a long-standing problem for the market, eroding the value of the century-old CBOT wheat contract as a tool for hedging risk. The biggest shock was that the CFTC subcommittee proposed implementing the changes starting with the most-active December 2009 contract, which holds the largest open interest.