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Turnaround Tuesday for corn, soybeans

04/16/2013 @ 1:50pm

U.S. grain and soybean futures settled higher Tuesday, recovering from heavy losses incurred in Monday's broad-based selloff on weaker Chinese economic data.

The markets found some stability at lower price levels following the exhaustion of the aggressive fund selling that drove corn, wheat and soybean futures to steep losses Monday.

The calming of outside markets from equities to crude oil and precious metals allowed grain and soybeans to stabilize and returned traders' focus to the fundamental factors affecting prices.

Monday's losses had more to do with what was happening in outside markets, but Tuesday, tight supplies and uncertainty about crop weather were back in focus, said Jack Scoville, vice president of brokerage Price Futures Group in Chicago.

The fundamentals of the markets aren't bearish, as traders still have to deal with historically tight corn- and soybean-supply situations and factor in the risk of a smaller U.S. winter-wheat crop due to adverse weather conditions in the Great Plains, Mr. Scoville said.

Futures fell sharply Monday, pressured by broader-based selling across asset classes amid a negative reaction to weak economic data from China. The market had a general perception that China, one of the largest importers of raw materials, could slow its imports of commodities due to declining economic conditions.

"Barring another meltdown in metals and energy futures, grain markets have enough uncertainties to limit price declines," Mr. Scoville added.

Still, some traders were surprised the markets didn't show a larger recovery from Monday's declines.

Traders are factoring in the potential for substantial increases in U.S. corn and soybean production this year, especially with plenty of moisture replenishing soils for crops that faced the worst drought in decades in 2012.

Cool, wet conditions are slowing corn plantings, but farmers still are enjoying the fact that their fields are getting some needed moisture, said Aaron Curtis, commodity risk consultant with MID-CO Commodities in Bloomington, Ill.



Traders also worry that farmers who are unable to plant corn because of the weather may switch some acres to soybeans, which could lead to expanded supplies of the oilseed.

Wheat futures were supported by worries about U.S. wheat crops. The U.S. Department of Agriculture, in a weekly report Monday, said 36% of the nation's winter-wheat crop was rated in good-to-excellent condition as of Sunday. The report reflected some damage to crops from freezing temperatures in the southern Plains, where crops also are threatened by severe drought conditions.

Chicago Board of Trade soybeans for May delivery settled up 16 1/2 cents, or 1.2%, at $14.11 1/2 a bushel. November soybeans finished up 11 3/4 cents, or 1%, at $12.18 1/2.

CBOT May corn ended up 16 1/2 cents, or 2.6%, at $6.63 1/4.

May wheat futures ended up 9 3/4 cents, or 1.4%, at $7.03 1/2 a bushel at the Chicago Board of Trade. Kansas City Board of Trade May wheat rose 9 1/4 cents, or 1.3%, to $7.41 3/4 a bushel. MGEX May wheat finished up 11 3/4 cents, or 1.5%, at $8.09 3/4 a bushel.


--Owen Fletcher contributed to this article.
Write to Andrew Johnson Jr. at andrew.johnsonjr@dowjones.com
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(END) Dow Jones Newswires
April 16, 2013 15:10 ET (19:10 GMT)
DJ UPDATE: U.S. Grain, Soy Futures Rise, Recover From Monday's Slide->copyright


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