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Profit-taking pressures U.S. crop futures

U.S. grain and soybean futures slid on Monday as traders took profits ahead of a government report that will update the outlook for U.S. harvests.

Soybeans have pulled back 3.7 per cent since approaching an 11-month high last week on concerns that heat and dryness will damage the nation’s crop.

Traders said they had priced in yield losses related to the weather and were waiting for updated signals about the size of the autumn harvests from the U.S. Department of Agriculture, which is set to release a monthly crop production report on Thursday.

There are more questions than usual about crop size this year because corn and soybeans were planted later than normal in the spring due to rains, postponing the start of harvest. Uncertainty will linger beyond Thursday’s data release, until the harvest picks up speed in the heart of the Farm Belt.

“I don’t know how important these reports are really going to be except for a short-term move,” said Jack Scoville, vice-president of Price Futures Group.

Chicago Board of Trade November soybeans lost 11-1/4 cents to $13.56-1/2 a bushel, while December corn stumbled 4-3/4 cents to $4.63-1/2. December wheat fell 6-1/2 cents to $6.41-1/4 a bushel (all figures US$).

Commodity funds sold an estimated 4,000 contracts each of soybeans and corn and 1,000 contracts of wheat.

Traders are paying close attention to U.S. production forecasts because large harvests are needed to replenish low inventories. U.S. soybean supplies were at a nine-year low at the end of August, while corn supplies hit a 17-year low, according to USDA data.

USDA is expected to trim its soybean yield estimate to 41.2 bushels per acre from 42.6 bushels in August, according to a Reuters poll. Analysts project USDA will cut its estimate for the average corn yield to 153.7 bushels, down from the 154.4 bushels forecast in August.

On Friday, private analytics firm Informa Economics pared its soy yield forecast to 42.4 bushels, from 42.7 bushels last month. It trimmed its corn yield estimate to 157.2 bushels, from 158.6 bushels one month ago.

“The rally has already priced in that level of production,” said Alan Brugler, president of Brugler Marketing and Management.

Dryness persists

The corn harvest has already started with large yields reported in southern states, which accounts for a small portion of the overall U.S. crop, according to traders. The influx of fresh supplies added pressure to prices, they said.

Soybeans, which are planted after corn in the spring, are running out of time for rain to improve yields before harvest, said Jim Gerlach, president of A/C Trading.

“You’ve got a lot more active harvest pace going on in corn,” he said.

Condition ratings for the U.S. corn and soybean crops are expected to decline in a weekly USDA report on Monday, extending a near month-long slide due to dry soils.

Good-to-excellent ratings for soybeans are projected to drop three percentage points to 51 per cent as of Sept. 8, according to a Reuters poll. Corn ratings are pegged at 54 per cent good to excellent, down two percentage points from last week.

In Iowa, the top soy- and corn-producing state, high temperatures and dry weather are “rapidly depleting yield potential,” said Rich Feltes, vice president of research for brokerage RJ O’Brien.

No widespread rains are expected in dry areas of the Midwest for the next 10 days, said John Dee, meteorologist for Global Weather Monitoring.

— Tom Polansek reports on the ag sector and futures markets for Reuters from Chicago. Additional reporting for Reuters by Colin Packham in Sydney and Sybille de La Hamaide in Paris.

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