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Grain futures mixed, corn drops on supply outlook

corn__wheat___soybeansGrain futures were mixed on Wednesday with wheat and soybeans trading slightly higher on the day, while corn made a moderate plunge for the first time in three days as favorable weather forecasts supported crop developing.

On the Chicago Mercantile Exchange, corn futures for July delivery lost 0.56% on the day, standing at $6.6925 a bushel. The grain ranged between daily high and low at $6.7150 and $6.6813 respectively.

According to DTNs report yesterday, drier and warmer weather will settle in the Midwest, the U.S. biggest growing region, that will favor development of late planted crops. Makiko Tsugata, an analyst at Market Risk Advisory Co. in Tokyo said for Bloomberg: “The grain market is overvalued and out of line with the fundamentals. This summer’s weather in the corn belt area is expected to be good for growth.”

The USDA said U.S. corn stockpiles before the 2014 harvest will total 1.949 billion bushels, well above market projections of 1.829 billion. This fall’s U.S. harvest will also exceed the 13.82 billion bushels expectations and will total 14.005 billion. The record domestic output will more than double inventories before the 2014 harvest, said the agency.

In its crop progress report on Monday, the USDA said that 92% of the nation’s corn crop emerged as of June 16, compared to 85% in the previous week. However, this is lower than the comparable week last year’s complete emerge of the crop and the five-year average of 97%.

The grain’s condition is comparable to last year’s with differences of a minor 1% in the “Poor” and “Excellent categories”. During the week ending June 16, corn of “Very poor” and “Poor” quality stood at 8%, “Fair” was 28% and 64% of the crop fell in the “Good” and “Excellent” sections.

Wheat gains slightly

Elsewhere on the grain market, wheat marks a minor daily gain. Wheat futures for July delivery were up 0.06% on the day, standing at $6.87 a bushel. Prices ranged between daily high and low at $6.8813 and $6.8263 a bushel respectively.

Despite ample supply forecasts from Australia, Russia and Ukraine’s Black Sea region and Europe, wheat advances as rains delayed winter wheat crop harvesting in the U.S. Australia increased its harvest projections last week, anticipating a 15% gain in output this year as favorable weather supported the crop.

Graydon Chong, a grains and oilseed analyst at Rabobank International in Sydney said for Bloomberg regarding Australias wheat crop: “Most of the country has had a pretty good start. These rains, if we get consistent rains throughout spring, will set us up for a pretty good harvest.”

In its weekly crop progress report on Monday, the USDA said that only 11% of the winter wheat was harvested as of June 16, compared to the preceding week’s 5%. This is well below last year’s 51% and the five-year average of 25%.

Meanwhile, 92% of the nation’s spring wheat was planted up to last week, compared to 100% as of June 16 2012. This is also below the 97% five-year average. Winter wheat condition is worse than the previous season. This year 43% of the crop is of “Very poor” and “Poor” quality, 26% is “Fair” and 31% belongs to the “Good” and “Excellent” categories. As of the same week 2012, 17% of the winter wheat crop was categorized as “Very poor” and “Poor”, 29% “Fair” and 54% had “Good” and “Excellent” qualities.

Luke Mathews, a commodity strategist at Commonwealth Bank of Australia wrote to Bloomberg: “The current slower-than-normal harvest pace is providing some near price support.”

Worldwide wheat output in the 2013-2014 crop year is expected to be 6.1% higher than the preceding period and near the record level of the 2011-2012 season, totaling 695.9 million metric tons of wheat, the USDA said on June 12. Canada is expected to boost its output by 6.6%, Russia by 43% and a 24% jump is expected in Ukraine, which will counter an 8.3% drop in the U.S.

Soybeans mainly unchanged

Soybeans remained almost unchanged on Wednesday. Soybeans futures for July delivery rose by 0.03% at 9:36 GMT. The oilseed traded at $15.1188 a bushel, moving between days high and low at $15.1525 and $15.0638. Prices were recently pressured as China’s demand outlook was reduced. The agency report showed soybeans planting fell behind last year’s pace and stood at 85% as of June 16, up from the preceding week’s 71%. However, this is well below last year’s 98% and the five-year average of 91%.

Also, soybeans emerged stood at 66% last week, compared to 48% in the preceding period. That is below the 2012 94% figure and the five-year average of 80%.

Soybeans crop condition is better this season with 6% belonging to the “Very poor” and “Poor” categories, 30% to “Fair” and the rest 64% to “Good” and “Excellent”. In comparison, during the same week last year 12% of the crop was of “Very poor” and “Poor” quality, 32% was “Fair” and 54% stood in the “Good” and “Excellent” sections.

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