June 20, 2013
Soy up for third day, corn firm on Fed stimulus
Chicago soybeans rose for a third straight session on Friday, and corn firmed, buoyed by the US Federal Reserve's announcement of a new round of stimulus measures which investors hope will improve the demand outlook for raw materials.
The gains, however, were capped by an decline in demand from top consumer China which has taken the steam out of a recent rally in prices triggered by the worst drought in more than five decades that has ravaged crops across the US grain belt.
Commodities and Asian shares rose on Friday while the dollar remained weak against other major currencies after the Fed said it would pump $40 billion a month into the world's largest economy until the US jobs market improves, reviving the appeal of risky assets that have suffered for months from uncertainty about global economic growth.
"Soybean and corn prices are reacting positively to the Fed move, but slowing exports are a concern," said Ker Chung Yang, commodities analyst at Phillip Futures Singapore.
"The rally has stretched since June, so the markets are looking at how demand is reacting to this." Soybeans have gained around 1 percent this week, rising for six out of seven weeks on fears that the drought will further reduce supplies as indicated on Wednesday by a US Department of Agriculture (USDA) report.
Corn is down nearly 3 percent this week, falling for a third consecutive week as demand weakens. Wheat is largely unchanged so far this week after falling 1.7 percent last week.
On Friday, Chicago Board of Trade new-crop December corn rose 0.2 percent to $7.75-1/2 a bushel by 0323 GMT while November soy rose 0.1 percent to $17.49-3/4 a bushel. December wheat was unchanged at $9.02 a bushel.
The Fed's move will likely accelerate the risk-positive momentum at work since the European Central Bank's bond-buying scheme to get borrowing costs down for euro zone members was approved by Germany's constitutional court.