* Improved crop ratings in the United States increase expectations for exceptional supplies
* Corn on the rise in oil prices, lower gains in ethanol production ceilings (New throughout, updates prices, market activity and comments; new signature, date changes, SINGAPORE / Previous PARIS)
By Naveen Thukral and Sybille from La Hamaide
CHICAGO, April 8 (Reuters) – Chicago corn futures collapsed on Wednesday, dropping some of their gains from their previous session, as the US government reports that the US ethanol industry has declined weekly production weekly in massive stocks.
Wheat futures followed in the middle of the day as investors strengthened their positions ahead of Thursday’s US Department of Agriculture report on estimates of global agricultural supply and demand (WASDE) .
The Chicago Board of Trade’s most active corn futures contract lost 1-1 / 2 cents to $ 3.29-3 / 4 a bushel at 11:50 a.m. (1650 GMT).
CBOT soybean futures rose 1/2 cents to $ 8.55-1 / 4 a bushel, while wheat futures fell 1 cents to $ 5.48-1 / 4 a bushel.
The market mainly took into account strong wheat production in the United States, traders said after the USDA announced better-than-expected harvest conditions on Monday, rating 62% of the crop as good to excellent. The report surpassed analysts’ expectations that only 56% of winter wheat will hit the mark.
The big driver of the day was corn – and the pain that the coronavirus panic caused to the ethanol sector, an important market for American corn.
A large number of US ethanol plants have closed due to the collapse in fuel demand due to the coronavirus epidemic, and meat packers have been hit by a disturbing side effect: fewer than carbon dioxide is now available to cool beef, poultry and pork.
“We have decreased by 33% for the year in terms of production and record stocks of ethanol. And that does not take into account the plant which closed its doors yesterday or which will close today or next week” , said Karl Setzer, commodity risk analyst for AgriVisor. “It’s definitely a bleak outlook for corn right now.”
Crude oil futures prices rebounded on Wednesday, buoyed by the hope that a meeting between OPEC members and allied producers on Thursday will lower production to boost prices amid the coronavirus pandemic.
But the elevator could not overcome concerns over the destruction of ethanol demand, according to market analysts.
“You have to do something to increase the demand for corn nationally, or someone steps in and buys something important in the export business,” said Mark Schultz, chief market analyst at Northstar Commodity. “I just don’t see it happening.”
Some traders are also questioning China’s appetite for American soybeans.
China released 500,000 tonnes of soybeans from state reserves on Tuesday, as delays in rain slowed shipments from Brazil. And this despite a phase 1 trade agreement between China and the United States, which promised a multitude of American agricultural exports, including soybeans. (Report by Christopher Walljasper, additional report by P.J. Huffstutter, Naveen Thukral and Sybille by La Hamaide, edited by Marguerita Choy)