U.S. new-crop corn futures sank to a fresh contract low on Tuesday on forecasts for mild weather to boost the size of the U.S. crop, which already has the best condition rating in 20 years.
Soybeans and wheat also fell as agricultural markets remained under pressure from prospects of ample global supplies. The U.S. Department of Agriculture, in a weekly report on Monday, unexpectedly raised its condition rating for the U.S. corn crop by 1 percentage point to 76 percent good to excellent. Condition ratings for soybeans held steady at 72 percent good to excellent, with both crops off to their best starts since 1994.
Farmers are expected to harvest a record-large soy crop and a near-record corn crop due to large plantings, mild temperatures and occasional rainfall.
“The high ratings combined with forecasts for non-threatening weather through August 1 should keep pressure against prices,” said Brian Hoops, president of Midwest Market Solutions. “Outside of small, technical short-covering rallies, it is hard to imagine a sustained rally developing.”
Chicago Board of Trade December corn dropped 9-1/4 cents to $3.79 a bushel by 10:05 a.m. CDT (1505 GMT) after touching a contract low of $3.78-1/4, below the previous low of $3.80-1/4 on Monday. November soybeans fell 15 cents to $10.71-1/4 a bushel, near Friday’s contract low of $10.65. September wheat dropped 5-3/4 cents to $5.32 a bushel, near Monday’s contract low of $5.24-1/4. Importers are cautious about booking deals for U.S. corn because they think prices will continue to decline, traders said.
However, private exporters struck deals to sell 120,000 tonnes of U.S. soybeans to top-importer China for delivery in the 2014/15 marketing year, which will start on Sept. 1. “U.S. soybean prices have fallen to a level which should attract buyers and support prices at current levels,” said Kaname Gokon, general manager of research at brokerage Okato Shoji in Tokyo. “Corn is not in the same situation as soybeans. The market will continue to face downward pressure and it could go below $3.80 a bushel by next week.”