US corn futures plunged 5 percent on Tuesday, posting their biggest daily loss in more than four months, due to softer cash markets, an indication that immediate demand for US supplies was waning, traders said. Forecasts for some rain in the US Midwest added pressure to corn as well to the soyabeans markets, which dropped 2.3 percent.
Wheat also fell, breaking a six-day rally, due to forecasts for beneficial rain in Russia's drought-stricken breadbasket regions and to pressure from a firming dollar, traders said. A US Agriculture Department report released late Monday, which showed farmers were almost done with spring planting and that the corn crop was in good shape, kept a bearish tone over the markets throughout the day.
"The grains did their best to ramp up into the early morning hours, but couldn't sustain higher trade following a wildly bearish weekly crop progress report," Matt Zeller, analyst with INTL FCStone, said in a research note to clients. "Those numbers, save for slightly declined winter wheat ratings (though still strong), finally were able to slow the massive wheat rally."
Cash bids for corn shipped to exporters at the US Gulf fell on Tuesday, an indication that export demand is easing, traders said. There also was talk that China was considering switching some of its old-crop purchases to new-crop, a move that would lessen pressure on the tight US supply situation. CBOT July wheat fell 18 cents to $6.86 a bushel by 1:46 pm CDT (1846 GMT) after rising to its highest since September 7 on a continuation chart in Monday's session.
July corn dropped 31-1/2 cents to $6.01-1/2 a bushel, while soyabeans fell 32-1/4 cents to $13.80-1/4 per bushel. The 5 percent drop in corn was the biggest in percentage terms since a 6.1 percent loss on January 12. "China demand fears re-ignited in grain markets as weather and supply concerns are put on the back-burner for now," said Mike Zuzolo, president of Global Commodity Analytics & Consulting LLC.
Rains are due in some of Russia's drought-stricken southern agricultural regions in the coming days, but hot, dry weather will persist in south central European Russia and the southern Volga valley, the state forecaster said on Tuesday. "The bull market needs to be fed and I just don't know if this weather forecast ... is bullish enough," said Chad Henderson, grain market advisor with Prime Agricultural Consultants.