GRAINS-Corn Hits 8-Year High as Dry Weather in Brazil Raises Supply Concerns

May 10, 2021

By Naveen Thukral

Chicago corn futures rose for a third consecutive session on Monday to hit their highest since March 2013 as dry weather in Brazil raised concerns about global supplies.

Wheat extended gains, while soybeans rose for a second straight session.

“There are big issues for Brazil corn crop which is suffering due to lack of rains,” a Singapore-based feed grains trader said. “Wheat is tracking gains in corn as it is used as a substitute for corn in animal feed.”

The most-active corn contract on the Chicago Board of Trade (CBOT) rose 2.2% to $6.88-1/4 a bushel by 0528 GMT, hovering near the session high of $6.98 a bushel – the highest since March 2013.

High corn prices are likely to reduce demand for the grain, analysts said.

“Looks like most of the action is in futures with the physical market lagging behind,” said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.

“Buyers are reluctant to actually pay this amount of money for physical grain. They may well have to eventually, but at the moment they are very reluctant.”

Brazil’s 2020/2021 total corn crop estimate was lowered by almost 8% to 104.1 million tonnes as dry weather is affecting yields of the country’s second corn plantings, forecaster Safras & Mercado said on Friday.

The overall production forecast was affected by a cut of some 10 million tonnes of Brazil’s second corn forecast, now expected to be 70.7 million tonnes, according to Safras.

Soybeans rose 0.9% to $15.47-1/4 a bushel, after closing 2.1% higher in the previous session, while wheat climbed 1.5% to $7.45-1/2 a bushel, after closing up 0.8% on Friday.

On the technical front, corn may test a resistance at $7.21-1/2, a break above which could lead to a gain into the $7.75-1/2 to $8.49 range, according to Wang Tao, a Reuters analyst for commodities technicals.

The condition of French wheat and barley declined sharply in the week ended April 26, data from farm office FranceAgriMer showed, suggesting a growing impact from dry, cold weather this month.

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