Corn near 1-week low as weakening oil prices curb ethanol demand

Source: By Naveen Thukral, Reuters • Posted: Tuesday, April 28, 2020

* Corn steady after deep losses, near last session’s 1-week low

* Slump in oil prices hits demand for corn-based ethanol fuel

* Favourable U.S. planting weather adds further pressure on corn (Adds details on oil prices, quote in paragraphs 3-5)

By Naveen Thukral

SINGAPORE, April 28 (Reuters) – Chicago corn futures were little changed on Tuesday after dropping 3% in the last session, with the market facing headwinds from slowing demand for the grain-based fuel ethanol and favourable U.S. crop weather.

Wheat and soybeans ticked higher for the first time in three sessions.

“The market’s gloomy outlook for U.S. ethanol production only continues to get gloomier as oil prices, near and far in time, make new lows,” said Tobin Gorey, director of agriculture strategy at Commonwealth Bank of Australia.

Adding to the gloom, he said forecasters were expecting a weather that would allow U.S. farmers to get on with planting a prospective record area of U.S. corn.

“On that, lurking in the news post close, is a hefty jump in planting progress by U.S. farmers,” he added.

Oil prices slumped, extending the previous session’s slide, on worries about limited capacity to store crude worldwide and expectations that fuel demand may only recover slowly as coronavirus pandemic restrictions are gradually eased.

The most-active corn contract on the Chicago Board Of Trade was unchanged at $3.13-1/4 a bushel by 0322 GMT, having closed down 3% in the previous session when prices hit their lowest since April 21.

Wheat was up 0.6% at $5.27-3/4 a bushel and soybeans added 0.1% at $8.37-1/4 a bushel.

The U.S. Department of Agriculture (USDA) said U.S. farmers were able to plant 27% of their intended corn acres as of Sunday, above the average of analyst estimates of 22% in a Reuters poll.

The USDA’s figure was up from 7% a week earlier and surpassed the five-year average of 20%.

Ukraine, a major grain producer and exporter, will not limit its corn exports this season, Deputy Economy Minister Taras Vysotskiy told Reuters on Monday.

The economy ministry had said last week that the government was considering limiting corn exports.

U.S. farmers planted 8% of their intended soybean acreage by Sunday, the USDA said, matching the estimate in the Reuters poll.

Russia confirmed it would not halt exports at the end of this season until all grain booked under a now-filled quota had been shipped.

Saudi Arabia’s state grain buyer SAGO said on Monday it bought 60,000 tonnes of Ukraine wheat from investment firm SALIC, marking its first purchase from agricultural investments overseas aimed at enhancing the country’s food security.

Gulf states, dependent on imports for around 80% to 90% of their food, have poured cash into buying tens of thousands of hectares of cheap farmland and other agricultural assets elsewhere to shore up their food security for over a decade. (Reporting by Naveen Thukral; Editing by Subhranshu Sahu)