Corn Futures Fall as Favorable U.S. Weather May Raise Yields

By Jae Hur and Luzi Ann Javier

July 27 (Bloomberg) -- Corn futures fell in Chicago, extending seven weeks of decline, on expectations that favorable weather will boost yields in the U.S., the world’s top exporter and China, the world’s second-biggest consumer.

The Delta states in the U.S. may get additional rains this week, improving conditions for corn and soybeans, DTN Meteorlogix LLC said in a weather forecast published July 24. Corn and soybean crops in Heilongjiang province in northern China will benefit from drier, hotter temperatures because soil moisture in the area is “quite high,” it said.

“The yield outlook for U.S. corn and soybean crops is very good following good weather,” said Toshimitsu Kawanabe, an analyst at Tokyo-based commodity broker Central Shoji Co. “That was a bearish factor for the market, while the dollar’s weakness against the euro limits their declines.”

December-delivery corn lost as much as 1.2 percent to $3.2325 a bushel in after-hours electronic trading on the Chicago Board of Trade, and was at $3.2675 a bushel at 1:32 p.m. Singapore time. Corn lost 1.3 percent last week, and dropped to a seven-month low of $3.1475 on July 22.

Soybeans for November delivery fell as much as 1.4 percent to $9.0225 a bushel in Chicago and traded unchanged at $9.15 a bushel at 1:33 p.m. Singapore time. The most-active contract fell 0.9 percent last week.

An estimated 71 percent of the U.S. corn crop got the best rating as of July 19, the same as a week earlier and up from 65 percent a year earlier, the USDA said June 20. The USDA will update its weekly assessment of crop conditions after the close of the Chicago market today.

About 67 percent of the U.S. soybean crop was rated good or excellent as of July 19, up from 66 percent a week earlier and compared with 61 percent a year earlier, the nation’s Department of Agriculture said in a July 20 report.

Dollar Falls

The dollar traded near the lowest level in seven weeks versus the euro before a report economists said will show new home sales rose in the U.S., adding to signs that the global economy is stabilizing. The dollar’s weakness makes U.S. crops attractive to overseas buyers holding other currencies.

The dollar last traded at $1.4240 per euro at 1:43 p.m. Singapore time. It touched $1.4291 on July 23, the weakest level since June 3.

Wheat for September delivery lost as much as 0.8 percent to $5.12 a bushel in Chicago, the lowest since July 7. The most- active contract traded at $5.1525 a bushel, down 0.2 percent.

The grain declined 4.7 percent last week on speculation that some investors will unwind futures positions should the U.S. government impose trading curbs on index funds.

Waivers that let index traders exceed position limits may be phased out, Gary Gensler, the Commodity Futures Trading Commission chairman, told a Senate hearing last week. The goal is to narrow the spread between cash prices and futures, he said. Less index investment may depress prices, analysts said.

To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net; Luzi Ann Javier in Singapore at ljavier@bloomberg.net