Forexpros – Corn futures edged lower on Thursday, as traders focused on short-term weather forecasts for major corn producing countries in South America, while a broadly stronger U.S. dollar also weighed.
On the Chicago Mercantile Exchange, corn futures for March delivery traded at USD6.5462 a bushel during European morning trade, dropping 0.66%.
It earlier fell by as much as 0.75% to trade at a two-day low of USD6.5362 a bushel. On Tuesday, prices rallied to a seven-week high of USD6.6387.
Forecasts showed rainfall was expected across major corn-growing regions in Eastern Argentina through January 11, providing short-term relief to stressed crops.
However, adverse weather was expected to return to the region next week, according to agricultural meteorologists.
Traders have been focusing on weather conditions and crop prospects in Southern Hemisphere countries in recent weeks, as most Northern Hemisphere grain crops have been harvested by now.
Argentina is the world’s fifth largest corn producer. A smaller crop outlook there would likely mean greater demand for U.S. supplies, which is the world’s largest producer and exporter of the grain.
The recent bout of dry weather in South America has been compounded by La Ni?a, a phenomenon in which tropical waters in the Pacific Ocean turn unusually cold.
The La Nina weather pattern typically brings heavier rainfall in Asia and drier weather in South America.
Meanwhile, commodity prices came under further pressure following disappointing results at a closely watched auction of French government debt.
France sold EUR4.02 billion of 10-year bonds at an average yield of 3.29%, compared with 3.18% at a similar auction last month. Bids exceeded the amount sold 1.6 times, down sharply from a bid-to-cover ratio of 3.1 in December.
The U.S. dollar strengthened to a 15-month high against the euro, while the dollar index was up 0.65% to trade at 80.91. 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 March delivery fell 0.85% to trade at USD6.4375 a bushel, while soybeans for March delivery dropped 0.9% to trade at USD12.1938 a bushel.
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