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Slump in CBOT corn futures draws out S Korean buyers

The front-month September delivery contract for corn futures on the Chicago Board of Trade posted its largest single-day loss since 2013 on Monday, and this has drawn out buyers from South Korea looking to take advantage of the price drop, market sources said Tuesday.

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The September contract had settled 25 cents/bushel lower at $3.85/bu after bearish data was released Monday by the US Department of Agriculture. The USDA issued higher-than-expected production estimates for corn in the US at 13.901 billion bushels (353.09 million mt) for 2019-2020, versus its previous estimate of 13.875 billion bushels (352.44 million mt).

South Korea's largest feed buyer Nonghyup Feed issued a tender to buy 45,000-69,000 mt of feed corn for January 10, 2020, arrival, sources said Tuesday. Nonghyup last bought a 69,000 mt cargo for January 1 delivery from Glencore at $207.50/mt on August 2, when the front-month contract on CBOT corn futures settled at $3.93/bu, the sources added.

KFA Incheon also issued a tender seeking 60,000-68,000 mt of feed corn for January 30 delivery, sources said. The tender also said that alternative offers for shipment over January 1-31 was acceptable. The tender will close at 4:30 pm Korea time (0730 GMT) Tuesday.

The September (U) corn futures contract on CBOT continued to show weakness during Asian hours, shedding another 9 cents/bu to $3.76/bu at 0620 GMT.

CFR Northeast Asia corn prices were last assessed at $209/mt on August 8, before the USDA released the report, and Singapore markets were closed August 9 and August 12 for national holidays.

As traders returned to the market Tuesday, values were hard to pin down with the surprise fall in CBOT futures. Brazilian basis offers for October shipments were not available, while November shipments were quoted 45 cents/bu over the December (Z) contract.

"Basically a knee jerk reaction," a source said. " [The market] needs a couple of days to see where this goes," he added.

Another trader said: "[Offers are] all nominal ... need to see where is the bottom."

The fears of a crisis in Argentina is also adding fuel to market uncertainty. After the Argentinian populist opposition's win in the primary elections Sunday, financial markets were hit, with the peso losing 16% of its value to 54 versus the US dollar in early trading, as people sought to protect their savings.

"I am not bullish premiums with this macro issues going on in Argentina and Brazil," one source noted.

In its monthly World Agricultural Supply and Demand Estimates report for August, the USDA estimated that the yield for 2019-2020 US corn would be 169.5 bu/acre, compared with a 166 bu/acre estimate in the July WASDE, and also above market estimates of 164.9 bu/acre.

Harvested acres under corn in the US are expected to total 82 million acres, according to the USDA's latest report, below the July estimate of 83.6 million acres but higher than the 80.05 million acres expected by market participants.

"Corn production is forecast at 13.9 billion bushels, up 26 million from the July projection, as a decline in harvested acres is virtually offset by an increase in yield," the USDA said.

--Elizabeth Thang, elizabeth.thang@spglobal.com

--Edited by Geetha Narayanasamy, newsdesk@spglobal.com