GRAINS-U.S. corn regains some ground after recent slide

Source: By Nigel Hunt, Reuters • Posted: Wednesday, June 24, 2020

LONDON, June 24 (Reuters) – Chicago corn futures edged away from the prior session’s three-week low on Wednesday although a favourable weather outlook for crops in the U.S. and weak demand were seen limiting the scope for any recovery in prices.

Wheat and soybean prices were little changed.

“The U.S. corn crop faced some weather issues at early growth stages but the weather outlook for July is positive with normal to above-normal rains and no excessive heat. This would mean that corn pollination would take place in almost ideal conditions,” Rabobank said in a report on Wednesday.

The most-active corn contract on the Chicago Board of Trade rose 0.5% to $3.26-3/4 a bushel, as of 1036 GMT after dipping to a three-week low of $3.21-1/4 on Tuesday.

Worries about fuel demand also weighed on the market as COVID-19 cases surged in the United States.

The United States saw a 25% increase in new cases of COVID-19 in the week ended June 21, compared to the previous seven days, with Arizona, Florida and Texas experiencing record surges in new infections, a Reuters analysis found.

About a third of U.S. corn production is used in making ethanol which competes with fossil fuel for market share.

“As far as corn-based ethanol use is concerned, the bottom line is that fuel demand is going to remain low for some time, which means pressure on corn and sugar,” said Phin Ziebell, agribusiness economist at National Australia Bank in Melbourne.

The CBOT’s most active wheat contract was unchanged at $4.91 a bushel while September wheat on Paris-based Euronext rose 0.6% to 178 euros a tonne.

Dealers noted the U.S. winter wheat harvest was progressing at slightly ahead of the normal pace.

“We see downward pressure building for wheat prices as the winter harvest picks up pace,” Rabobank said.

CBOT’s most active soybean contract was down a marginal 0.06% at $8.74-1/2 a bushel. (Additional reporting by Naveen Thukral; editing by Uttaresh.V and Elaine Hardcastle)