Corn near 1-week low on slow ethanol de­mand, ex­port com­pe­ti­tion

The Financial Daily - - INTERNATIONAL -

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

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