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Soy up, corn prices drop

Updated: 03/16/2011 @ 2:42pm

CHICAGO, Illinois (Agriculture.com)--Ongoing concern about Japan's recovery from its earthquake, tsunami, and nuclear crisis, combined with weaker U.S. economic signals, applied pressure on the CME Group grain markets Wednesday. 

The May corn futures settled 19 1/2 cents lower at $6.16 1/2. The May soybean contract closed 17 cents higher at $12.87.  The May wheat futures ended 5 3/4 cents lower at $6.62. The May soymeal futures settled $3.70 higher per short ton at $344.50. The May soyoil futures closed $0.08 higher at $52.96.

In the outside markets, the NYMEX crude oil is $1.27 per barrel higher, the dollar is higher, and the Dow Jones Industrials are down 178 points.

Tim Hannagan, PFGBest.com senior grain analyst, says the psychology of the corn market is still that the No. 1 U.S. corn buyer is on the sidelines. "When will Japan be able to handle regular corn purchases? How long will it take shipments to clear their damaged or backed-up ports? How hard has the Japanese economy been hit and how will that affect corn consumption? These are all uncertainties for the corn market. Thus, you see a weaker market today."

The Japanese situation caused not only a meltdown potentially there at the reactors, but also here in futures prices, Jack Scoville, PRICE Futures Group vice-president says. "Many speculators were of the opinion that it was better to sell first and ask questions later and they did. We had another round of selling yesterday as the situation got worse, and it seems that the deteriorating situation is causing more selling now late in the session today, after the grains had held better overnight and for the first part of the day today," Scoville says.
Funds Sell

It's believed the sell-off is supported by the trading and hedge funds, not the index funds, analysts say. "Index funds are basically locked into positions unless the customers involved in those funds decide to liquidate, and even then it can’t be done each day in many cases," Scoville says. 

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