Soybeans at 2-week low; corn, wheat fall for 2nd day
Tuesday, 11 September 2012: SINGAPORE: Chicago soybeans slid to a two-week low on Tuesday, falling for a fifth consecutive session, while corn hovered near its lowest in six weeks as investors moved out of bullish bets ahead of key US government reports.
Wheat also eased, tracking the weakness in corn and soy, but analysts said the market could move higher with dryness hurting crops in Australia and lower output in the Black Sea region.
The US Department of Agriculture’s monthly supply-demand and crop production reports on Wednesday could provide insight into whether this summer’s drought-fed rally in corn and soybean prices to record highs can run longer.
“Everyone is looking forward to the USDA report and we are likely to see pressure on corn prices ahead of the report as much of the bad news has been factored in,” said Lynette Tan, investment analyst at Phillip Futures in Singapore.
Chicago Board of Trade new-crop November soy fell 0.2 percent to $17.14-1/4 a bushel, lowest since Aug. 28.
December wheat slid 0.5 percent to $8.85-3/4 a bushel by 0318 GMT, while December corn gave up 0.1 percent to trade at $7.82-1/2 a bushel, not far from Monday’s six-week low of $7.81 bushel.
There could be a surprise for soybeans in the report while much of damage to corn is known, analysts said.
Unrelenting demand from exporters and domestic processors for soybeans could depress projected soy inventories to the lowest level in 36 years, according to analysts.
Analysts predict USDA report will show that the worst drought in 56 years has slashed nearly 5.0 billion bushels off the corn crop, or about $40 billion worth at current prices.
In a separate report on Monday, USDA said corn harvest was 15 percent complete as of Sept. 9, up just 5 percentage points from a week earlier. USDA’s first update on this year’s soybean harvest showed that crop was 4 percent harvested.
The pace of corn harvest fell below the average of analysts’ estimates in Reuters poll that pegged harvest at 17 percent complete.
The wheat market could find support from tightening supplies in the Black Sea region and dryness curbing yields in Australia, the world’s second largest exporter.
“I think there is still some upside potential as the market is expecting Russia to take action to limit exports,” said Tan. “We also have Australian wheat crop facing adverse weather.”
Australia cut its forecast for wheat production in the 2012/13 crop marketing year by about 7 percent from its previous forecast to 22.5 million tonnes, warning that there was a risk of yields falling further if rains did not arrive in some areas.
Russia’s government is trying to cope with a drought that has slashed grain yields by more than a quarter. Officials are promising no grain export limits, yet industry experts believe they could occur as soon as October.