U.S. grains: Soybeans fall on weather, snap five-session rally

(Keith Weller photo courtesy ARS/USDA)

Chicago | Reuters — U.S. soybean futures fell on Wednesday, pressured by favourable crop weather and profit-taking after a five-session advance that was driven by resurgent export demand, analysts said.

Corn futures firmed modestly, gaining against soy ahead of a key U.S. government crop report due on Friday, while wheat futures rose on hopes for export business.

At the Chicago Board of Trade, benchmark November soybeans settled down 5-3/4 cents at $9.82-1/4 per bushel (all figures US$).

December corn ended up 1/2 cent at $3.33 a bushel and September wheat rose 4-3/4 cents at $4.21-3/4 a bushel.

Soybeans fell on forecasts that added beneficial rains for the U.S. Midwest this week and later in the month, bolstering prospects for a big crop.

“It’s all tied to weather. You’ve got big rains coming here over the weekend and another big rain a week out. That is perfect growing weather for beans,” said Roy Huckabay of Linn + Associates, a Chicago brokerage.

Additional pressure stemmed from traders unwinding long soy/short corn spread positions. Soybeans have gained against corn in recent days in response to stepped-up export demand.

The U.S. Department of Agriculture through its daily reporting system confirmed sales of U.S. soybeans in each of the previous 10 trading sessions, although no new soy sales were reported on Wednesday.

“I think there have been some people (who were) long beans/short corn because of all the business going on,” Huckabay said.

Corn futures inched higher but remained rangebound as traders awaited the USDA’s monthly supply/demand reports on Friday, including the government’s first U.S. corn and soy yield estimates based on field surveys.

Most analysts surveyed by Reuters expect USDA to raise its forecast of the U.S. 2016-17 corn yield from its current figure of 168 bushels per acre.

However, Lanworth, a division of Thomson Reuters, on Wednesday projected the U.S. 2016 corn yield at 165.6 bushels per acre, below USDA’s current figure.

Front-month wheat futures hit a two-week high, gaining against back months on spreads. The contract drew support from a drop in recent days of the number of contracts registered for delivery against futures, often an indicator that cash markets are providing more lucrative returns.

Some traders believe the fact that the spot wheat contract dropped below $4 a bushel last week for the first time in nearly a decade may be enough to spark export interest.

“Gains in wheat are being amplified by short-covering, position rolling and some talk of fresh export demand,” INTL FCStone’s chief commodities analyst Arlan Suderman said in a note to clients.

— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Michael Hogan and Colin Packham.

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