Forexpros – Corn futures declined on Wednesday, giving back some of the previous day’s gains as increasing competition for U.S. corn exports and lingering concerns over the euro zone’s debt crisis drove prices lower.
On the Chicago Mercantile Exchange, corn futures for December delivery traded at USD6.3963 a bushel during European morning trade, slumping 0.77%.
It earlier fell by as much as 0.92% to trade at a daily low of USD6.3863 a bushel.
Corn prices came under pressure after Japan confirmed earlier that it made its biggest purchase of European grain in at least a decade, seeking a cheaper alternative to U.S. corn supplies.
The country bought 800,000 metric tons of corn from Ukraine, after it removed a tax on exports last month.
According to sources, the purchase, made by five Japanese trading companies, were at prices nearly USD20 a ton cheaper than U.S. corn.
Japan is the world’s largest corn importer, while Ukraine is forecast to become the world’s third largest corn exporter in the 2011-12 marketing season, according to the U.S. Department of Agriculture.
Meanwhile, commodity traders continued to eye developments surrounding the euro zone’s sovereign debt crisis.
Italian government borrowing costs eased back below the 7% threshold, a level widely viewed as unsustainable in the long term, while Spanish yields also declined amid speculation the European Central Bank was purchasing bonds in the secondary market.
However, worries over potential debt contagion in core euro zone economies continued to weigh on commodities, with investors eyeing Spanish and French bond auctions scheduled to take place later Wednesday and on Thursday.
A stronger U.S. dollar also contributed to losses, with the greenback trading close to a five-week high against the euro, while the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.44% to trade at 78.44.
A stronger dollar reduces the appeal of U.S. crops to overseas buyers and makes commodities less attractive as an alternative investment.
Elsewhere on the Chicago Mercantile Exchange, wheat for December delivery fell 0.8% to trade at USD6.2713 a bushel, while soybeans for January delivery dropped 0.88% to trade at USD11.8963 a bushel.
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