Grain futures edge lower on yields outlook

Grain futures edged lower on Thursday amid expectations for high yields. Market players continued to observe U.S. crop conditions and weather forecasts.

On the Chicago Board of Trade, corn futures for delivery in September traded at $4.9313 per bushel at 11:46 GMT, down 0.86% on the day. Prices held in range between days high and low of $4.9738 and $4.9188 per bushel respectively. The grain rose 2.97% on Wednesday amid concern over dry and hot weather hurting yields and settled at the highest level since July 31 but trimmed its weekly advance to 4% following Thursdays losses.

Corn was pressured as yields in Indiana were expected to rise by 48% to an average of 167.4 bushels per acre, while yields in Illinois may surge 40% to an average of 170.5 bushels per acre, according to participants in the Professional Farmers of America Midwest Crop Tour. Meanwhile, yields in Nebraska may surge to 154.9 bushels per acre. Tour participants include brokers, farmers, hedge fund analysts, agronomists and grain buyers who visit seven corn and soybean growing areas over four days.

DTN said on Tuesday that Southern Minnesota and central Iowa may see 1.3 cm. of rain at most tonight and the rest of the Midwest will remain mostly dry through the end of the week. The USDA said on August 19 that corn and soybean plants are maturing slower than usual, leaving them at risk for frost in the next few months.

Profarmer Australia, a unit of NZX Ltd., said in a report on Wednesday: “The Pro Farmer crop tour through the U.S. Midwest is providing a focus for the market. The U.S. corn crop will bolster ending stocks considerably even if weather stays hot and dry into the harvest.”

On August 12, the USDA trimmed its U.S. corn output forecast to 13.763 billion bushels, 1.3% below its July estimate at 13.950 billion and also less than the 14.036 billion forecast by a Bloomberg survey. Stockpiles are also poised to drop and will equal 1.837 billion bushels, 6% below July’s 1.959 billion projections.

However, according to Goldman Sachs Group Inc. and Deutsche Bank AG, corn output will be above USDA’s latest forecast and will total 14.14 billion and 14.25 billion bushels respectively, the two groups predicted. Even if the government agency’s projection is met, this year’s harvest will still be a record-high and 28% above 2012′s drought-damaged crop.

Meanwhile, soybeans also declined on the day and traded at $13.2200 per bushel at 11:48 GMT, marking a 0.77% decline. Futures varied between days high and low of $13.3075 and $13.1663 per bushel respectively. The oilseed rose 1.63% on Wednesday and settled at the highest level since July 26, extending its weekly advance to over 3% so far.

Soybeans were supported throughout the week as inspections showed yields may be lower than the three-year average. The inspected by the tour soybeans fields in Nebraska showed an average of 1 138.9 pods per each 3-by-3 feet plot, well above last year’s 894 pods. In Indiana, inspections showed an increase to 1 185 pods on average, compared to 1 033 a year earlier. However, the reported figures were lower than the three-year average of 1 162 pods per three square feet, which supported prices.

The USDA reported on Monday that crop condition has worsened last week. As of August 18, 10% of plants were rated very poor-poor, compared to 9% in the previous week and 37% a year earlier. Meanwhile, 36% were categorized as “Fair”, above the preceding five-day period’s 34% and below 2012′s 53%. As for the premium quality, 62% of the crop was rated good-excellent, marking a 2% decline from a week earlier but still well above last year’s 31%.

The U.S. Department of Agriculture trimmed its soybean production forecast to 3.255 billion bushels last Monday, 5% below July’s 3.42 billion estimate, but still 8% higher than a year earlier. Yields expectations were also reduced and now stood at 42.6 bushels per acre, below the previous reading of 44.5 bushels and analysts’ projections for a 43.6 output per acre.

Elsewhere on the market, wheat also fell, declining by 0.81% to $6.3400 per bushel at 11:48 GMT. Prices held in range between days high and low of $6.4038 and $6.3250 per bushel respectively. The September contract surged 0.6% on Wednesday but trimmed its weekly advance to 0.4% following Thursdays retreat.