Monday October 20, 2014

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U.S. corn soars on firm cash market, technicals

Wheat exports may exceed USDA's full-year estimate

U.S. corn futures advanced Monday on firm cash markets and concerns that another round of showers would stall planting late this week in the U.S. Midwest, where producers are scrambling to catch up after a cool, wet spring delayed field work.

"We'll definitely see pretty healthy plantings the first half of this week, then delays again beginning next weekend," said John Dee, meteorologist at Global Weather Monitoring.

Wheat rose too, rebounding from losses on Friday following a bearish monthly supply and demand report issued by the U.S. Department of Agriculture.

At the Chicago Board of Trade, most-active July corn settled up 19-1/4 cents at $6.55-1/2 per bushel (all figures US$). July soybeans ended up 20-1/4 cents at $14.19-1/4 a bushel, and July wheat was up 5-1/2 cents at $7.09-3/4 a bushel.

Technical buying lent support, with most-active July corn surpassing last week's high of $6.52-1/2 and briefly trading above its 50-day moving average of $6.58-1/4.

Fireworks in May contracts ahead of expiration

The thinly traded May contracts in corn and soybeans rose sharply ahead of their expiration on Tuesday, supported by tight old-crop U.S. supplies.

May corn settled up 30-1/4 cents at $7.18 after reaching $7.22-1/2, the highest spot corn price since USDA's March 28 quarterly stocks report sent prices tumbling.

Spot May soybeans ended up 32-3/4 cents at $15.21 after touching $15.27-1/4, the highest spot price in six months.

The CBOT has reported no deliveries of soybeans, corn or soymeal during the May delivery cycle, a sign that commercial grain handlers see more value in selling into the cash market than in delivering against futures.

"I don't know how anyone short in May is going to get out other than buy their way out, and that could get pretty tense," said Roy Huckabay at the Linn Group, a Chicago brokerage.

Planting delays added to the strength in the cash market, analysts said. Producers may be reluctant to sell the last of their old-crop harvest until they feel confident about prospects for the new crop, said Dan Cekander, grain analyst with Newedge USA in Chicago.

After the close of the market, USDA said the U.S. corn crop was 28 per cent planted -- up from 12 per cent a week earlier, but slightly below an average of trade estimates for 29 per cent. The figure lagged the five-year average pace of 65 per cent.

USDA reported soybean planting progress at six per cent, up from two per cent the previous week, but trailing an average of trade estimates for 10 per cent, and behind the five-year average of 24 per cent.

"Psychologically, this (week) is a critical one for getting corn planted. Many analysts claim corn seeded after mid-May tends to see lower yields," said Karl Setzer, a commodity trading adviser at MaxYield Cooperative in West Bend, Iowa.

CBOT December corn, representing the U.S. 2013 harvest, settled up 9-3/4 cents at $5.39-1/4.

The contract hit a two-week low of $5.22-3/4 on Friday after USDA forecast a record crop that would bolster U.S. stocks to more than 2 billion bushels at the end of next season, above trade expectations despite reduced yields due to late planting.

U.S. soybean production was projected at a record 3.39 billion bushels with 2013-14 ending stocks more than doubling to 265 million bushels from the 125 million estimated for the end of this season. The forecast was above trade expectations for 236 million bushels.

Wheat prices advance

Wheat prices followed corn higher, clawing back some of Friday's losses following USDA's larger-than-expected 2013-14 world stocks forecast.

Dealers said the market also derived support from an improving outlook for U.S. exports.

"With European supplies dwindling, U.S. wheat is favourably positioned in the export market, and U.S. exports are now starting to outpace the levels needed to reach the USDA's full-year estimates," Morgan Stanley said in a market note.

USDA in its crop progress report said 32 per cent of the U.S. winter wheat crop was rated in good to excellent condition, unchanged from the previous week.

-- Julie Ingwersen covers the CBOT corn, soy and wheat markets for Reuters in Chicago. Additional reporting for Reuters by Sam Nelson in Chicago, Nigel Hunt in London and Naveen Thukral in Singapore.


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