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Markets find stability

John Walter 10/03/2011 @ 3:52pm

U.S. grain and soybean prices stabilized Monday, ending a sharp selloff spurred by trader's views that the markets were undervalued and oversold.

Grain traders managed to push prices up from multi-month lows, encouraged that the heavy selling by managed funds that plagued futures in recent weeks was exhausted. Industry analysts were encouraged by a rebound in soybeans and corn after touching new lows during the overnight trading session, a sign that Friday's unexpected increase in government supply estimates was adequately factored into prices.

Grain prices drew support from bargain-basement shopping by grain buyers amid views prices are undervalued after plunging in September, says Mike Zuzolo, resident with Global Commodity Analytics and Consulting.

Traders expect commercial buyers of soybeans such as processors and livestock producers who use soybeans as feed to reenter the market and take advantage of recent price declines. Buying by end-users of corn such as livestock and ethanol producers helped to fuel the rebound in futures Monday.

Grain and oilseed futures fell sharply Friday and that lower theme extended into Sunday's overnight session, as traders were less fearful of smaller 2011 corn crops after government forecasters reported the market had a larger cushion of supplies from the previous marketing year.

However, corn and soybean advances were capped by ongoing global economic worries surrounding unresolved Greece debt issues and seasonal harvest pressure. Warmer, drier weather conditions across the central U.S. are expected to accelerate harvest activity.

The influx of fresh supplies from Midwest fields will weigh on nearby prices until the new inventories are absorbed into the supply chain, analysts said.

Meanwhile, wheat futures ended mixed with Chicago wheat recovering from prior declines on exhausted fund selling. Spring wheat futures however, were unable to escape price weakness, playing catching up to the losses seen in other markets late last week. Spring wheat avoided much of that battering, so once fund selling settled in today, the losses were easily exaggerated, says Sterling Smith analysts at Country Hedging.

Corn for December delivery ended unchanged at $5.92 1/2 a bushel on the CBOT. Soybean futures fell 1 1/2 cents to $11.77 1/2.

MGEX December wheat closed down 7 cents at $8.85 1/4 a bushel, KCBT December wheat dropped 2 cents to $7.02, and CBOT Dec wheat rose 10 1/4 cents to $6.19 1/2.

Other Markets

CBOT December soymeal fell $1.60 to $307 per short ton and December soyoil dropped 0.21 cents to 50 cents per pound. CBOT November rice climbed 4 cents to $15.99 per hundredweight

CBOT December oats ended unchanged at $3.28 a bushel. The December ethanol contract ended flat at $2.328 per gallon.

-By Andrew Johnson Jr., Dow Jones Newswires; 312-347-4604; Andrew.johnsonjr@dowjones.com

(END) Dow Jones Newswires

October 03, 2011 16:10 ET (20:10 GMT)

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