Markets

Corn takes hit from concerns over global economy

By Luzi Ann Javier (China Daily)
Updated: 2010-09-09 15:05

SINGAPORE - Corn futures declined from the highest in more than 14 months as grains and other commodities tracked losses in equities on concern that global economic growth may be curbed.

December-delivery corn dropped for the first time in five days, losing as much as 0.4 percent to $4.642 a bushel on the Chicago Board of Trade. The contract Tuesday climbed to $4.69, the highest price for the most-active contract since June 11, 2009. It traded at $4.652 a bushel at 2:44 pm Singapore time.

The MSCI World Index, which tracks global stock values, fell for a second day, after losing 1.1 percent on Tuesday amid concern that European lenders will need more capital to offset holdings of bonds in the euro zone's weakest economies.

"There's a little bit of uncertainty about the trends generally in the financial markets," Michael Pitts, commodity sales director at National Australia Bank Ltd, said by phone from Sydney on Wednesday. Grains including corn and wheat may resume their rally because of lingering concerns about supply, he said.

The condition of the corn crop in the United States, the world's largest grower and exporter, deteriorated last week. Corn rated good or excellent dropped to 69 percent of the total as of Sept 5, from 70 percent a week earlier, the US Department of Agriculture (USDA) said in a report on Tuesday.

China should defend its turf, says Supachai Related readings:  Corn imports set to slow  Corn futures soar on crop concerns in China, US  China curbs corn auction buying as stockpiles fall  Rising demand likely to boost corn imports

The US crop may be 13.147 billion bushels, 1.6 percent smaller than the 13.365 billion bushels forecast by the USDA last month, as hot, dry weather reduces yields, Allendale Inc said on Sept 3, citing results of a survey of farmers in producing states from Aug 9 to Aug 27. The USDA will release its latest estimate on the US crop, and global supply and demand Sept 10.

The corn harvest may be "substantially lower than what the USDA had forecast and that will start to tighten the balance sheet in the US," Pitts said. "Certainly, there's enough uncertainty around the grains complex generally" to generate a further rally, he said.

Wheat for December-delivery contract was little changed at $7.3425 a bushel in Chicago.

Egypt, the world's biggest wheat importer, plans to buy at least 55,000 metric tons of the grain in a tender on Wednesday for shipping from Oct 21 to Oct 31, Nomani Nomani, the vice chairman of the state-run General Authority for Supply Commodities, said on Tuesday.

Russia's government raised its estimate for national grain stockpiles to 26 million tons, from about 22 million tons earlier, sufficient to meet domestic demand for food and animal feed, Agriculture Minister Yelena Skrynnik said on Tuesday.

The worst drought in at least half a century has destroyed 30 percent of crop plantings in the 38 regions across Russia in which the government declared emergencies. Weather-related losses amount to more than 39 billion rubles ($1.3 billion), Skrynnik said.

Bloomberg News