U.S. grains: Corn, soy fall to four-year lows ahead of record harvests

(Lisa Guenther photo)

Chicago | Reuters –– U.S. corn and soybeans futures fell more than one per cent to their lowest levels in four years on Thursday in a technical selloff sparked by the looming harvest of record-large crops.

Wheat futures also were mostly lower, with several contracts reaching lifetime lows for a second straight session. The dollar climbed to its highest point in more than a year against a basket of other currencies, further weighing on U.S. grains as importers could more cheaply source supplies priced in other currencies.

“The corn action more than anything else is technical,” said analyst Roy Huckabay of the Linn Group grain brokerage in Chicago. “We’ve gone sideways for two months, and when we broke out of that trading range, it created a pretty heavy round of technical selling.”

Corn on Wednesday broke through the most recent lows, notched on Aug. 12, to fall to the lowest point since June 2010 on a continuous chart after the U.S. Agriculture Department unexpectedly boosted good-to-excellent conditions ratings for the U.S. corn and soybean crops.

After the USDA announcement late on Tuesday, several private analysts lifted their own crop estimates beyond already record forecasts for the corn and soy harvests.

“Technically, getting below $3.60 (per bushel of corn) opens the door to $3.35,” Huckabay said (all figures US$).

Most-active Chicago Board of Trade December corn finished 5-1/2 cents, or 1.6 per cent, lower at $3.46-1/2 per bushel after hitting a contract low of $3.43-3/4.

Soybeans for November delivery fell 16-3/4 cents to $10.03-1/4 per bushel. On a continuous chart for the most-active soy contract, prices declined to as low as $10.01-1/4 – the lowest point since Sept. 1, 2010.

Investors were pricing in a larger crop on expectations that USDA will increase its own outlook in the next monthly supply and demand report, due next Thursday (Sept. 11).

“There is a large crop coming our way in the U.S., and conditions have been favourable,” said Graydon Chong, senior grains analyst at Rabobank. “From our perspective, we expect some upward revisions in the USDA corn forecast.”

Crop forecaster Lanworth on Wednesday lowered its forecast for the U.S. 2014 corn yield, but its production projection was still higher than the USDA.

Research advisory firm Allendale Inc. said Wednesday it forecast the 2014 U.S. corn crop at 14.409 billion bushels, above the government’s latest estimates.

The big harvest projections come as U.S. corn is struggling to compete in international markets with cheaper offerings out of Argentina and the Black Sea region, plus large volumes of feed wheat as more of the European wheat crop than usual is expected to fall short of milling quality.

The competitiveness of U.S. wheat has been curbed by strength in the dollar, which on Thursday set a one-year high against the euro after the European Central Bank cut interest rates to record lows.

CBOT December wheat settled 5-1/2 cents lower at $5.30 after hitting a contract low of $5.27-1/2 earlier in the day.

— Michael Hirtzer reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Colin Packham in Sydney and Gus Trompiz in Paris.

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