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Tight stocks lift nearby corn, soybeans

07/05/2013 @ 2:22pm

U.S. corn and soybean futures settled mixed Friday, with nearby contracts higher on tight current supplies.

"New crop" futures--such as the November soybean and December corn contracts that represent crops to be harvested in autumn--fell, pressured by improved crop conditions for developing crops in the U.S. Farm Belt. Corn for December delivery fell to its lowest level in 2 1/2 years for the contract.

"Corn and soybeans are following the same playbook," said John Kleist, senior analyst with brokerage Ebottrading.com.

"It's a tale of two markets within one, with tight supplies supporting near-term contracts while ideal weather for developing crops are weighing on contracts for delivery later in the year."

Corn and soybean supplies have been tight ever since the U.S. harvests last year were reduced by the country's historic drought. Cash markets for the two commodities are strong, as robust demand places pressure on scarce supplies. Those factors have supported nearby corn and soybean futures for months.

Yet, "new crop" futures are lower, as investors continue to brace for U.S. corn and soybean supplies to rebuild substantially in 2013.

For the next five days, the National Weather Service forecasts rainfall ranging from a quarter-inch to two inches through most of the Corn Belt. The heaviest rains will fall from southeastern Minnesota to Ohio.

The NWS's six- to 10-day and eight- to 14-day outlooks predict above-average chances of rain in much of the Corn Belt, with average chances in Minnesota, northeastern Iowa and northern Illinois. Temperatures are mostly expected to be below-average.

"The price weakness in "new crop" prices is predicated on weather," Mr. Kleist said. "Developing crops have very favorable weather on tap for the next week and that boost expectations for record U.S. crop production."

Chicago Board of Trade corn for July delivery finished up 6 1/2 cents, or 1%, at $6.84 3/4 a bushel. The December contract settled down 11 1/2 cents, or 2.3%, at $4.91 1/4. CBOT soybeans for July delivery finished up 4 1/2 cents, or 0.3%, at $15.88. The November soybean contract settled down 22 1/2 cents, or 1.8%, at $12.28 1/4.

U.S. wheat futures settled mixed Friday, with nearby futures drawing support from signs of improved export demand. "Wheat is buoyed by a pickup in export demand," Mr. Kleist said.

The U.S. Department of Agriculture announced Friday private exporters reported selling 120,000 metric tons of soft red winter wheat for delivery to China during the 2013-14 marketing year. The news came after the USDA on Wednesday similarly said private exporters had sold 360,000 tons of wheat to China.

July wheat futures ended down 1 3/4 cents, or 0.3%, at $6.56 a bushel at the Chicago Board of Trade. Kansas City Board of Trade July wheat climbed 1 1/2 cents, or 0.2%, to $6.85 a bushel. MGEX July wheat finished unchanged at $7.61 1/4 a bushel.


--Owen Fletcher contributed to this article
Write to Andrew Johnson Jr. at andrew.johnsonjr@dowjones.com.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
July 05, 2013 15:16 ET (19:16 GMT)
DJ U.S. Corn, Soy End Mixed; Tight Supplies Lift Nearby Contracts->copyright


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