July starts with falling corn prices

By Mike Roberts

Commodity Marketing Agent, Virginia Tech

BLACKSBURG, Va. — Corn on the Chicago Board of Trade finished limit down again July 7, with the exception of the July 2008 contract.

Falling corn prices were a result of long liquidation, minor profit taking and forecasts for better weather in the Corn Belt.

The July 2008 contract finished at $7.16 per bushel, off 29.4 cents and 8.2 cents lower than June 30. The December 2008 contract closed at $7.47 per bushel, off 30 cents and 10 cents lower than June 30.

Price pressure. Sinking crude oil prices and a strengthening U.S. dollar also pressured prices. As huge fund positions sink due to falling crude oil, they balance risk by taking money out of grain and livestock futures.

This need to balance the portfolios of all those teachers, state employees, and mutual fund investors influences the flow of money into and out of commodity futures.

Also putting corn prices on the defensive was the passage of House Bill 6377, which directs the U.S. Commodity Futures Trading Commission to “use all authority, including emergency powers, immediately to curb the role of excessive speculation in the energy and swaps futures markets and take other corrective actions as necessary to eliminate any market disturbance that prevents energy markets from accurately reflecting the forces of supply and demand.”

If this bill becomes law, funds may be forced to get out of large energy market positions, triggering a ripple effect downward in agriculture commodity markets as they liquidate.

Comparisons

Late July 7, USDA put the U.S. corn crop at 62 percent good-to-excellent condition versus trade expectations for 63 percent to 65 percent. USDA placed corn-inspected-for-export at 32.4 million bushels versus estimates for 30-35 million bushels.

The Mississippi river opened to limited barge traffic July 7 after flood waters continued to recede. This helped river bids for cash corn. Cash corn in the U.S. Mid-Atlantic states were 1 cent to 3 cents lower per bushel.

Hopefully up to 60 percent of the 2008 crop has been priced. Trading will most likely remain very volatile.

Soybean futures down

Soybean futures on the Chicago Board of Trade fell July 7 amid profit taking and long liquidation, despite news that Argentinean farmers may continue their strike because of high export taxes.

The July 2008 contract finished at $15.89 per bushel, down 69 cents from the July 4 close and 16 cents lower than June 30. November 2008 soybean futures closed at $15.61 per bushel, off the limit 70 cents from the July 4 close, but only 13 cents lower than June 30.

USDA placed the U.S. soybean crop at 59 percent good-to-excellent versus 65 percent at this time last year.

Also on July 7, USDA put U.S. soybeans-inspected-for-export at 9.09 million bushels versus expectations for 8-12 million bushels.

Cash soybeans bids were steady along the river, while 10 cents to 12 cents weaker in the Mid-Atlantic states.

Hopefully, 60 percent of the 2008 crop priced has been priced.

Wheat futures down

Wheat futures in Chicago closed down July 7 on harvest pressure and weakness in soybeans and corn.

The July 2008 contract closed at $8.22 per bushel, off 50.6 cents and 21.4 cents lower than June 30. July 2009 wheat futures closed off 47.4 cents at $9.02 per bushel and 20 cents lower than June 30.

It looks like the global wheat crop is going to be a good one as harvest figures come in. News of drought in Iraq’s wheat belt was supportive while reports of rain in Argentina were seen as bearish.

In export news, USDA placed wheat-inspected-for-export at 18.41 million bushels versus expectations for 15-20 million bushels.

Pakistan bought 20 million bushels of optional-origin wheat last week while the market expects that much more to be tendered for this week from there. Iraq tendered for 1.85 million bushels of any-origin wheat as well.

Japan tendered for 4.7 million bushels of food wheat, while South Korea reissued a tender for 698,000 bushels of U.S. wheat.

Wheat in Kansas City and Minneapolis fell also.

Hopefully the entire 2008 wheat crop has been sold by now.