GRAINS-Corn eases on proposal to nix ethanol mandate
* Senators propose ending ethanol mandate
* Big South American crop prospects pressure soybeans
* China rejects another U.S. corn cargo on unapproved GMO
* Wheat falls to new contract lows on big world supply
By Sam Nelson
CHICAGO, Dec 12 (Reuters) - U.S. corn futures fell on Thursday, notching the biggest one-day loss since mid-November, after a group of U.S. senators proposed ending the mandate to use corn-based ethanol.
Corn also eased on concerns about the fate of U.S. corn sales to China after the country began rejecting cargoes containing an unapproved GMO corn variety and on talk the unwanted variety may also be in some containers of distillers dried grain (DDG).
"I think (corn) reacted to the downside (due to the mandate worry) but this China corn rejection deal is still hanging over the markets head as well," said independent trader Ken Smithmier.
Soybean futures fell more than 1 percent, its biggest one-day loss since Nov 15, on prospects for a bumper South American soybean crop early next year and despite export sales of U.S. soybeans last week that exceeded estimates.
Wheat fell to new contract lows due to a plentiful global stockpile and a tepid export sales pace for U.S. wheat.
Chicago Board of Trade March corn closed down 5 cents per bushel at $4.34-1/4, January soybeans fell 20-1/4 cents to $13.23-3/4 per bushel and March wheat slid 7 to $6.33-3/4.
A group of 10 U.S. senators introduced a bipartisan bill on Thursday to eliminate the corn ethanol mandate, arguing that current law pushes up the cost of food and animal feed and damages the environment.
"The proposal had a definite immediate shock to prices but long-term I don't think it has a chance getting through Congress, it will have a tough time clearing the farm lobby," said Sterling Smith, a futures specialist for Citigroup.
"Also, there is a lot of ethanol use built into fuel standards even without the mandate so I question how much of an impact ending the mandate would have," Smith said.
Corn had already been laboring due to concerns about the future sales of U.S. corn to China after an unapproved genetically modified (GMO)variety was detected in several cargoes from the United States.
"Right now they really don't need the corn; they had record production, so time is on their side and they can drag their feet on this whole approval process if they want to," Shawn McCambridge, an analyst for Jefferies Bache, said.
China on Wednesday blocked the entry of another U.S. corn cargo, and three more may be turned away after tests found a strain of unapproved GMO corn.
"Going forward, there could be lower demand from China for U.S. corn," said Vanessa Tan, an investment analyst at Phillip Futures in Singapore.
Traders said on Wednesday that corn turned down by China was being switched to other Asian countries, sometimes with price cuts.
USDA, in its weekly export sales report on Thursday, showed U.S. corn export sales last week within the range of estimates but soybean sales were well above estimates.
However, soybean futures fell despite the big export number.
"Soybean traders are looking at South American weather, which is excellent in Brazil," said Dax Wedemeyer, an analyst for U.S. Commodities, Des Moines, Iowa.
"Beans are running into a lack of news and are down despite the big export number ... the volume is getting lighter in a holiday market," Wedemeyer said.
The USDA said Thursday U.S. export sales of soy last week for the 2013/14 marketing year totaled 1,108,500 tonnes, above estimates for 750,000 to 950,000 tonnes.
"The bean export number was above even the biggest estimate, which was mine, so there is still good demand especially from China," said Sterling Smith, a futures specialist for Citigroup.
"China wants to lock in supplies until they get more confident in the South American crop," Smith said.
Wheat remained under pressure from a USDA report Tuesday that showed expected U.S. and global wheat supplies were above expectations.
"Wheat is under pressure from the big global supplies, big supplies in the U.S. and everywhere else," Wedemeyer said.
- Malaysia military source says missing jet veered to west |
- Ukraine appeals to West as Crimea turns to Russia |
- Malaysia air probe finds scant evidence of attack: sources |
- UPDATE 1-Missing Malaysian plane last seen at Strait of Malacca-source
- CIA accused of spying on U.S. Senate intelligence committee