Chicago | Reuters — U.S. corn and soybean futures climbed on Monday on forecasts for hot, dry conditions across the Midwest farm belt as well as technical buying and positioning ahead of Tuesday’s monthly U.S. Department of Agriculture (USDA) supply-and-demand reports.
The market eased from overnight highs, however, as updated weather models appeared slightly less threatening to crops and as wheat futures turned lower.
“The market got spooked overnight by that hot, dry weather forecast, with a heat dome coming into more of the corn belt. But the models did not pan out, so some of the risk premium came out,” said Don Roose, president of U.S. Commodities.
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U.S. grains: Corn rebounds from contract lows on short covering, bargain buying
Bargain buying and short covering lifted U.S. corn futures on Monday after the market slid to contract lows on expectations for strong U.S. output, traders said.
“The corn and the beans are trying to hold on with the crop report tomorrow, trying to correct some of the technically oversold conditions,” he said.
The corn crop is entering its critical pollination stage of development, so the market is particularly sensitive to forecasts indicating stressful heat and dryness. Soybeans face a greater risk from such weather in August.
Chicago Board of Trade December corn ended 5-1/2 cents higher at $6.29 a bushel, while November soybeans were up 8-1/2 cents at $14.05 a bushel (all figures US$).
CBOT September wheat fell 35 cents to $8.56-1/2 a bushel after hitting technical chart resistance near its 20-day moving average. Selling accelerated as prices dipped below its 200-day moving average.
Grain markets had rebounded last week in a technical bounce from multimonth lows and speculation that lower prices could spark import purchases by China or other global buyers.
Traders are looking ahead to Tuesday’s monthly USDA crop reports, which are expected to show a slight increase is the agency’s U.S. corn crop outlook, along with a small drop in soy production.
— Reporting for Reuters by Karl Plume in Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.
