Tuesday September 30, 2014

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U.S. corn ends higher, led by new-crop contracts

Wheat firm on rain delays but world supplies cap gains
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U.S. corn futures rose on Tuesday, led by deferred contracts on technical buying and forecasts for potentially stressful hot weather in late June, traders said.

"The thought of any high-pressure ridge -- the market is very sensitive to that right now, after what happened last year," said Sterling Smith, futures specialist with Citigroup in Chicago, alluding to the historic Midwest drought that slashed corn yields in 2012.

Soybeans ended mixed, with back months gaining against the nearby July contract, and wheat firmed on bargain-buying following recent declines.

At the Chicago Board of Trade (CBOT), July corn settled up 4-3/4 cents at $6.73-1/4 per bushel and new-crop December rose 12 cents at $5.50-1/2, its highest settlement since June 7 (all figures US$).

July soybeans fell 1-3/4 cents at $15.10-3/4 a bushel while new-crop November rose 4-1/4 cents at $12.89-3/4.

July wheat settled up seven cents at $6.87-1/2 a bushel.

Corn firmed in early moves as the spot July contract climbed to $6.77-1/4 per bushel, filling a gap in its chart dating to March 28. On that day, corn prices crashed after the U.S. Department of Agriculture reported higher-than-expected U.S. quarterly stocks.

At that point, traders began taking profits and farmers sold some of their reserves, sending the July briefly into negative territory.

"At these high prices, we did see a pickup in cash movement. It was just enough to bend us back a bit," said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

New-crop December corn got a boost from updated midday weather forecasts showing hot weather ahead of the U.S. Fourth of July holiday. However, some analysts said late-planted crops stunted by cool, wet weather would benefit from the heat.

"If you talk to the guys in the country, what they need is some heat and sunshine. The corn has got plenty of water now, and if we could get the sun and warmth, the crops will be looking a lot better," said Roy Huckabay with the Linn Group, a Chicago brokerage.

USDA said 92 per cent of the corn crop had emerged by Sunday, lagging the five-year average of 97 per cent.

Soybeans end mixed

As with corn, strength in soybeans also shifted to the back months as traders took profits on long July/short November spreads and rolled long positions forward ahead of July options expiration on Friday.

Private exporters reported sales of 240,000 tonnes of U.S. soybeans to China for delivery in 2013-14, USDA said, adding support to new-crop contracts.

Nearby July soybeans traded higher for most of the session but turned lower toward the closing bell.

Earlier, some Iowa soy processors raised their cash bids for soybeans by 15 cents to 20 cents per bushel. The moves came a day after the National Oilseed Processors Association reported the U.S. soybean crush for May at 122.6 million bushels, up from 120.1 million bushels in April, underscoring strong soybean usage despite dwindling supplies.

Wheat up on bargain buying

Wheat firmed on short-covering and bargain buying one day after CBOT July wheat fell to a near one-month low. But rising world supplies and the start of harvesting in the Northern Hemisphere kept a lid on gains.

USDA said the U.S. winter wheat harvest was 11 per cent complete by Sunday, behind the five-year average of 25 per cent. Rains slowed fieldwork over the weekend.

"There is enough uncertainty out there to keep the market bears cautious," said Shawn McCambridge, grains analyst with Jefferies Bache in Chicago.

"But I don't see a lot of upside potential because of the world balance sheet," he added. "We are starting to see new-crop supplies work into the market. Within the next couple weeks these pipelines will be replenished."

-- Julie Ingwersen reports on the CBOT ag markets for Reuters from Chicago. Additional reporting for Reuters by Gus Trompiz in Paris and Colin Packham in Sydney.


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