Chicago | Reuters — U.S. soybean futures fell on Tuesday as expectations for a bumper U.S. harvest rose on overnight rains across a broad stretch of the Midwest and a government report showing the crop in better shape than expected, traders said.
The storms, which eased lingering concerns about dry weather during the past few weeks reducing harvest yields, also weighed on corn futures.
Wheat futures rose for the fifth day in a row on bargain buying and improving export demand. Prices for the front-month contract hit their highest since July 18.
The market remained focused on production, with the rain bolstering expectations that huge harvests of both corn and soybeans will replenish depleted supplies at elevators and processors around the country.
“Good rains were seen overnight across a large portion of the Midwest, which did serve to relive some of the weather worries that were lending support to the market,” Sterling Smith, futures specialist at Citi, said in a note to clients.
Chicago Board of Trade soybeans for August delivery fell 9-3/4 cents to $12.22-3/4 a bushel (all figures US$). The new-crop November contract, which tracks the crop that will be harvested in the coming weeks, posted the biggest decline, shedding 1.3 per cent, or 13-3/4 cents, to $10.65-3/4.
The U.S. Agriculture Department said on Monday afternoon that the soybean crop was rated 71 per cent good to excellent, unchanged from a week ago and one percentage point above the average of analysts’ forecasts.
“I think we are seeing the market react to the USDA’s crop condition report, which was higher than expected,” said Andrew Woodhouse, grains analyst at Advance Trading Australasia.
Some private production forecasts added to the bearish tone hanging over the market.
INTL FCStone projected the U.S. 2014 soybean harvest at 3.865 billion bushels, with an average yield of 46 bushels per acre, and Farm Futures Magazine estimated the crop at 3.857 billion bushels, with an average yield of 46.07 bushels per acre. Both estimates are above USDA’s current forecasts.
Informa Economics’ soybean forecast fell below the USDA’s but the closely watched firm’s outlook for 3.7 billion bushels would still be a record crop if realized.
For corn, all three firms issued forecasts above the USDA’s outlook, with INTL FCStone estimating U.S. production at 14.455 billion bushels, with an average yield of 172.4 bushels per acre and Farm Futures pegging the crop at 14.331 billion bushels, with an average yield of 171.06 bushels an acre. Informa predicted a 13.988 billion bushel crop, based on an average yield of 168 bushels per acre.
CBOT September corn futures were 2-1/2 cents lower at $3.56-1/4 a bushel. Prices for the front-month contract found support near the four-year lows hit earlier this week.
CBOT soft red winter wheat for September delivery rose 8-1/2 cents to close at $5.52-1/2 a bushel. Prices have risen 6.4 per cent during the five-day rally, the longest for the front-month contract since an equal stretch that ended on Feb. 5.
— Mark Weinraub is a Reuters correspondent covering agriculture and ag commodity markets from Chicago. Additional reporting for Reuters by Colin Packham in Sydney and Gus Trompiz in Paris.