Corn near 1-week low on slow ethanol demand, export competition
HAMBURG/SINGAPORE: US corn fell for a third straight session on Wednesday to around its lowest in the past week, pressured by slowing demand for corn-based fuel ethanol as crude oil prices weaken and poor export prospects for U.S corn.
Soybeans were moving in and out of positive territory after losing nearly 1 per cent on Tuesday as Chinese demand shifts to South America, which is on track for record crops.
"Corn is seeing downward pressure again because of export competition, especially from Ukraine, to US supplies and unattractive ethanol margins as crude oil prices are at low levels," said Stefan Vogel, head of agricultural commodity markets research at Rabobank.
"Soybeans are seeing some support from bargain-buying after their fall on Tuesday and wheat continues to be weakened by poor US export prospects after the recent dollar strength."
Chicago Board of Trade March corn was down 0.2 per cent at $3.80-1/4 a bushel at 1054 GMT, close to the low of $3.76 touched on Jan. 14 and Jan. 15. March soybeans fell 0.1 per cent to $9.72 a bushel.
March wheat fell 0.6 per cent to $5.15-1/2 a bushel, having closed down 0.3 per cent on Tuesday when prices hit a low of $5.17-1/2 a bushel, their weakest since mid-October.
"We are seeing a downward move in corn prices because of the ongoing impact of ethanol demand with oil prices having fallen to such a great extent," said Phin Ziebell, agribusiness economist, National Australia Bank. "It is not really viable to produce ethanol and this is going to hit corn."
Crude oil has lost more than half of its value in the face of slowing demand and a supply glut which has reduced the appeal of renewable fuels made mainly from grains and vegetable oils.
"Corn is slightly weaker today, not moving much lower," Rabobank's Vogel said. "But we are seeing aggressive export sales offers of Ukrainian corn in competition to US supplies which are weakening corn. If Ukraine cannot export much wheat it will turn to corn in the near future, while South America will also increasingly emerge as a competitor to US corn when the harvest starts."
Ukraine's government and traders agreed that no more than 1.2 million tones of Ukrainian milling wheat will be exported up to June 30. "Wheat has been pushed down as the US has suffered a lack of export demand in non-traditional destinations and also Paris wheat prices have weakened," Vogel said. "I think the market agrees that the Ukraine restrictions will not have too much of an impact on wheat demand."
Soybeans remained pressured after the US Department of Agriculture said on Tuesday that private exporters cancelled sales of 120,000 tonnes of soybeans to China.
This was the third cancellation this month of soybean sales to top buyer China. The moves reflect a seasonal shift in the focus of the export market from the United States to South America, where soybean harvesting is starting.
"Strong soymeal prices in past days have prevented soybean prices from falling lower but currently I do not see a lot of bullish news for soybeans on the horizon, on the contrary South American weather looks decent in coming days and the Brazilian soybean harvest has started with some good initial yields," Vogel said. -Reuters