U.S. grains: Corn sags on long liquidation, favourable crop conditions

Chicago | Reuters — U.S. corn futures fell on Friday on technical selling including fund-driven long liquidation along with strong crop prospects amid mostly favourable weather in the U.S. Midwest, analysts said.

Wheat futures also declined as the U.S. winter wheat harvest began while soybeans closed firm as traders awaited news from U.S.-China trade talks this weekend.

Chicago Board of Trade July corn futures settled down 2-1/2 cents at $3.91-1/2 per bushel but held support at Tuesday’s one-month low of $3.90-3/4 (all figures US$).

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For the week, the contract fell 14-1/2 cents, or 3.6 per cent, its biggest weekly drop since late June 2017. Corn futures have been under pressure since the U.S. Department of Agriculture on Tuesday rated 79 per cent of the crop in good to excellent condition, topping trade expectations.

Weather forecasts called for above-normal temperatures in the U.S. Midwest, particularly late next week. But periodic showers should keep conditions favourable in most areas.

“The funds are sitting here with a big (net) long position,” said Don Roose, president of Iowa-based U.S. Commodities, noting that the corn market was vulnerable to long liquidation.

“Crop ratings are the highest they’ve ever been, and this heat is really driving the roots down. So far it’s been more of a plus than a minus,” Roose said of recent warm temperatures.

Wheat futures fell on profit-taking after a 10-month high this week, and seasonal pressure from the start of the U.S. hard red winter wheat harvest in the southern Plains.

CBOT July wheat ended down three cents at $5.23-1/4 per bushel, but stayed inside the previous day’s trading range and well below the 10-month peak of $5.54 struck on Tuesday.

The winter wheat harvest was 29 per cent complete in Texas and about 15 per cent done in Oklahoma, industry group Plains Grains Inc. said in its first harvest report of the year.

“It’s going to be a harvesting weekend for hard red winter wheat, and yields are a little bit better than we thought,” Roose said.

Soybeans closed modestly higher after a choppy trading session. The July contract ended up 2-3/4 cents at $10.21-1/4 per bushel but stayed inside the previous day’s trading range.

Strength in soy was capped by jitters about U.S. trade relations with China, the world’s biggest soy buyer, as U.S. Commerce Secretary Wilbur Ross headed to Beijing for weekend trade talks.

“Negotiations between the U.S. and China remain at the centre of all concerns, each side blowing hot and cold,” consultancy Agritel said in a note.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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