U.S. grains: Profit-taking, advancing harvests snap rallies

(Lisa Guenther photo)

Chicago | Reuters –– U.S. grain futures retreated from their highest prices in more than two months on Wednesday under pressure from advancing U.S. harvests and profit-taking ahead of key crop reports.

Declines in corn snapped a four-day rally that was fuelled by expectations the U.S. Department of Agriculture will trim its production estimates in the monthly reports due on Friday.

USDA will probably cut its projections for the country’s average corn yield and for the number of acres of corn and soybeans that will be harvested, according to a Reuters poll of analysts.

However, “the fact remains that global grain supplies are large and do not look to be reduced drastically any time soon,” said Kayla Burkhart, broker for CHS SunPrairie in North Dakota.

“There are some concerns that U.S. production could not be as high as what the USDA has forecast but overall yields have been pleasantly surprising” for corn, she added.

Chicago Board of Trade December corn dipped 0.6 per cent to $3.95-3/4 a bushel after touching $3.99-3/4, the highest price for a front-month contract since July 24 (all figures US$). The nearby contract has tumbled by almost 50 per cent over the past three years due large harvests.

December wheat fell 1.8 per cent to $5.16-3/4 after trading to $5.31-1/2, the highest price for a nearby contract since July 21. Profit-taking weighed on the market, which has recently been supported by concerns about dry weather in the Black Sea region, a major wheat exporter.

But soybeans bucked the weaker trend and advanced for the third consecutive day. November soybeans gained 0.4 per cent to $8.91-3/4.

Commodity funds sold an estimated 6,000 corn contracts and 5,000 wheat contracts and bought 5,000 soybean contracts.

USDA is expected to raise its estimate for the average soybean yield from September, with big harvests being reported in states including Iowa and Minnesota. The agency will reduce its estimate for U.S. soybean ending stocks to 414 million bushels from 450 million, according to the Reuters poll.

Stocks probably need to drop below 400 million to extend the rally in soybeans, traders said, noting that inventories above that level are considered to be comfortable.

“Soybeans being up right now really surprises me,” said Karl Setzer, risk management team leader at MaxYield Cooperative in Iowa. “Look at the yields.”

Falling oil prices added pressure on agricultural markets after gains in energy helped to lift grains earlier this week, traders said.

Tom Polansek reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Michael Hogan in Hamburg and Naveen Thukral in Singapore.

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