Forexpros – Corn futures declined for the first time in four days on Wednesday, as a broadly stronger U.S. dollar prompted investors to lock in gains from a rally that took prices to the highest level since September.
On the Chicago Mercantile Exchange, corn futures for May delivery traded at USD6.5638 a bushel during European morning trade, shedding 0.85%.
It earlier fell by as much as 0.95% to trade at a session low of USD6.5612 a bushel.
Corn futures rallied in the three days leading up to Wednesday, rising nearly 5.5% amid concerns corn crops in major South American growers and on speculation of increased demand from China.
Prices rose to USD6.6662 a bushel on Tuesday, the highest since September 27.
However, the three-day rally prompted some investors to sell their position and lock in gains on profit taking.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.2% to trade at 80.80, the highest since January 18.
A stronger dollar reduces the appeal of U.S. crops to overseas buyers and makes commodities less attractive as an alternative investment.
The dollar’s gains were fuelled by an upbeat assesemtn of the U.S. economy by the Federal Reserve, which reduced expectations for a third round of U.S. monetary easing by the central bank.
News that Argentine dockworkers on Tuesday suspended a 12-day-old strike that had delayed more than USD500 million in grains shipments provided another catalyst to take profit from recent gains.
The suspension of the strike will allow the workers and port managers to negotiate a deal ahead of a March 26 meeting between the two sides at the Labor Ministry in Buenos Aires.
Argentina is an agricultural powerhouse. The South American country usually ships 200,000 tonnes of farm products per day. The port strike had stocked fears over supply disruptions.
But losses were limited as concerns remained over Argentina’s corn harvest outlook. The government estimates this year’s corn harvest will total between 21 and 22 million metric tons.
Rains in January and February were not sufficient to improve parched crops that were damaged by a drought late last year.
Argentina is the world’s second largest corn shipper and competes with the U.S. for business on the global market.
Downbeat Argentinean crop prospects could boost demand for U.S. supplies, which is the world’s largest corn producer and biggest exporter.
Speculation of robust Chinese demand for U.S. corn also provided support.
Elsewhere on the Chicago Mercantile Exchange, wheat for May delivery fell 0.8% to trade at USD6.4313 a bushel, while soybeans for May delivery added 0.1% to trade close to a five-month high of USD13.5063 a bushel.
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