Corn, Wheat Rally as Price Drops Seen Excessive; Soybeans Gain

Corn and wheat rebounded on speculation that yesterday’s price slumps were exaggerated. Soybeans also climbed.

Corn gained as much as 1.1 percent and wheat rose as much as 1.1 percent after plunging yesterday by the most in three months on speculation that a U.S. government fraud lawsuit against Goldman Sachs Group Inc. will curb investment demand for riskier assets, including commodities.

“It’s bargain-hunting after a sharp decline,” said Toshimitsu Kawanabe, an analyst at Tokyo-based commodity broker Central Shoji Co.

Corn for July delivery gained as much as 3.75 cents to $3.61 a bushel on the Chicago Board of Trade and was at $3.6025 at 1:52 p.m. Tokyo time. The grain fell 4.5 percent yesterday, the biggest drop for a most-active contract since Jan. 12.

The U.S. corn crop was 19 percent planted as of April 18, up from 3 percent a week earlier, the U.S. Department of Agriculture said in a report yesterday after the close of trading.

“The slump in grain values reflected the trade’s focus returning to fundamentals,” said Toby Hassall, a commodity analyst with CWA Global Markets Pty Ltd. in Sydney. “U.S. corn planting is proceeding at a cracking pace and Midwest weather forecasts suggest favorable early season conditions will continue.”

Soybeans for July delivery rose 0.3 percent to $9.8925 a bushel after declining 0.9 percent yesterday.

“Chicago soybeans took a degree of strength from a solid weekly export inspections tally against the backdrop of tight U.S. old-crop inventories,” Hassall said.

Freeze Damage

U.S. exporters sold 120,000 metric tons of corn to unknown buyers, 110,000 tons of the grain to South Korea, and 165,000 tons of soybeans to China, the USDA said yesterday.

In the export market, South Korea is seeking to buy 55,000 tons of corn for food production in a tender today.

China, the world’s second-biggest corn grower, sold 100 percent of the grain on offer at a state auction, the National Grain and Oil Trade Center said. Traders bought all of the 179,800 tons of corn held in a temporary reserve in northeastern Heilongjiang province, the center said today. Prices ranged from 1,560 yuan ($228) to 1,760 yuan per ton, averaging 1,682 yuan.

Wheat for July delivery climbed 1 percent to $4.8425 a bushel in Chicago after plunging 4.6 percent yesterday, the biggest decline since Jan. 12.

The wheat crop in China, the world’s biggest producer, may be damaged by a freeze that has delayed planting in Heilongjiang by more than 10 days, the China National Grain and Oils Information Center said today. Cold temperatures are also “adverse” to rapeseed growth, the center said.

Jae Hur
Source: Bloomberg