Forexpros – Corn futures extended losses from the previous session during European trade on Monday, falling to a two-week low as broader market risk aversion and crop-friendly weather in the U.S. weighed.
On the Chicago Mercantile Exchange, corn futures for May delivery traded at USD6.2188 a bushel during European morning trade, tumbling 1.05%.
It earlier fell by as much as 1.15% to trade at USD6.2113 a bushel, the lowest since March 30.
Agricultural commodities were affected by outside influences on Monday, as appetite for riskier assets came under pressure amid mounting fears over the outlook for global economic growth.
Official data released Friday showed that the Chinese economy grew by 8.1% in the three months to March, disappointing expectations for an 8.3% increase, after recording an expansion of 8.9% in the fourth quarter.
It was the slowest pace of growth in almost three years, fuelling concerns over a slowdown in the world’s second largest economy and the biggest consumer of many commodities.
A deeper slowdown in China would impair a global expansion that is already faltering because of the lingering effects of the euro zone’s debt crisis and the implementation of harsh austerity measures throughout the region.
Meanwhile, the cost of insuring Spanish sovereign debt against default rose to a fresh record earlier, amid fears that the country will be the next euro zone member to require a bailout.
Spanish 10-year yields rose above the key 6.0%-level in early trade Monday, hitting 6.15%, the highest since December 1. Similar-maturity Italian yields increased to 5.66%, while Portuguese yields climbed to 12.73%.
The news prompted investors to shun riskier assets, such as stocks and commodities, and flock to the relative safety of the U.S. dollar.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.3% to trade at 80.27, the highest since April 5.
A stronger dollar reduces the appeal of U.S. crops to overseas buyers and makes commodities less attractive as an alternative investment.
Meanwhile, crop-friendly rainfall in the U.S. Midwest corn-belt further added to the selling pressure. Agricultural traders pay close attention to the weather because farmers need favorable conditions to grow large crops to replenish low inventories.
The U.S. produced 38% of the world’s corn last year, making it the both world’s largest corn producing nation and the largest exporter of the grain, while China is the world’s largest consumer of the grain.
Market participants were looking forward to the U.S. Department of Agriculture’s weekly planting progress report after Monday’s closing bell on the CBOT. In its last update, it said 7% of the corn crop had been planted.
Despite the recent slump, agribusiness financial service provider Rabobank remains bullish on corn prices, citing the prospect of a jump in Chinese imports and the risk of lower-than-expected new-crop corn yields.
Price risks for futures in corn for harvest this autumn “are skewed to the upside”, the bank said in a report Friday.
Elsewhere on the Chicago Mercantile Exchange, wheat for May delivery fell 0.8% to trade at a two-week low of USD6.1775 a bushel, while soybeans for May delivery shed 0.5% to trade at USD14.2913 a bushel.
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