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Morning markets: corn drops below $3 a bushel

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Corn dropped below $3 a bushel for the first time this year, and other crops were under pressure, as traders braced for grim reading in Friday's crop report.

The long weekend in the US did little to revive sentiment in crops, which suffered badly last week as estimates emerged of just how big this year's American soybean and corn harvests could be.

If there was a glimmer of hope, it was provided by Kuala Lumpur palm oil which showed signs of perking up after five consecutive days of losses spurred by data showing weaker Malaysian palm exports.

The benchmark November contract closed the morning session on the Bursa Malaysia Derivative Exchange 21 ringgit higher at 2,151 ringgit a tonne, after touching 2,163 ringgit earlier.

Short-covering, after a 15% fall since mid-August, was credited for the rise, ahead of official Malaysian palm data for August due on Thursday.

$3 a bushel

Back in Chicago, if corn investors were nervous of a surprise result (ie weaker crops) in Friday's US Department of Agriculture report on global crop supply and demand, they weren't showing it.

Significant short-covering had yet to appear on the agenda, with September corn down 1.75 cents at $2.98 ¾ a bushel, the first time since December that a near-term contract had been below $3 a bushel.

It may have been little consolation to investors in the December lot that it remained above $3, at $3.04 ¼ a bushel, down 2 cents on the day, and above the $3.02 hit earlier.

That was the lowest for a second contract since October 2006.

Also oppressing corn was, as ever, the weather. Meteorlogix's forecast for eastern and western US crops was "generally favourable conditions for filling corn due to recent rainfall".

Beans mixed

Soybeans did somewhat better. They were weather-blessed as well, enjoying "generally favourable conditions for pod setting and filling soybeans through the Midwest with adequate rainfall in most areas".

It added: "Warmer weather will benefit the crop."

However, while September soybeans slipped 10 cents to $9.53 a bushel, a five-month low, the better-traded November lot added 4.75 cents to $9.26 ¾ a bushel, looking to break its own five-day losing streak.

Two-year low

Wheat, meanwhile, remained under pressure from ever-increasing northern hemisphere harvest estimates, the latest in Russia.

The December contract, where the action is happening, slipped 1.5 cents to $4.70 ¼ a bushel.

Earlier it hit $4.68 ¾ a bushel, the lowest since April 2007 for a nearest-but-one contract.

By Agrimoney.com

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