Grain futures mixed, soybeans advance on extended dry weather forecasts

Grain futures were mixed on Monday with soybeans advancing for a third straight day, while corn and wheat fell. Market players awaited this weeks USDA crop progress report on Monday and the agencys forecasts update on Thursday.

On the Chicago Board of Trade, soybeans futures for November delivery traded at $13.7613 a bushel at 10:48 GMT, up 0.56% on the day. Prices ranged between days high and low of $13.8388 and $13.7088 per bushel respectively. The oilseed rose by 0.1% on Friday, a second daily advance in a row, and settled the week 1% higher after falling 0.5% in the preceding five-day period.

Soybeans extended last weeks gains as weather forecasts kept showing dry weather across key growing areas. The oilseed rose by 13% in August as unfavorable conditions threatened to curb yields after heavy rains in the beginning of the summer season delayed the crop development. MDA Information Systems LLC said on September 6 that no significant rain is expencted in the Midwest over the next ten days and dryness will remain widespread across the central and western parts of the region.

Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, said by phone for Bloomberg: “The USDA is the focus this week and we’re expecting another downgrade to U.S. soybean production prospects. There’s been a deterioration in U.S. seasonal conditions in the last couple of months and a subsequent decline in crop conditions and therefore yield prospects.”

The USDA reported on Tuesday that as of the week ended September 1, 15% of soybeans were rated very poor-poor, compared to 13% a week earlier and 37% last year. Meanwhile, 31% of the crop was categorized as “Fair”, above the preceding week’s 29% and below 2012′s 33%. As for the premium quality, 44% of the plants were rated as good-excellent, marking a 4% decline from the previous week, but well above last year’s 30%.

Corn falls

Meanwhile, corn futures for delivery in December fell by 0.28% to $4.6688 per bushel at 10:49 GMT. Prices ranged between days high and low of $4.7088 and $4.6538 a bushel respectively. The grain rose 1.5% on Friday but still settled the week 3% lower after declining 2.3% in the preceding one.

Corn was pressured last week and fell to a three-week low of $4.5712 a bushel on Thursday as weather forecasters predicted showers over the Corn Belt in the next five days. The grain rebounded on Friday as market players returned to the market to seek cheap valuations but nevertheless settled the week 3% lower.

The USDA reported last Tuesday that the corn crop condition remained fairly unchanged from the preceding week and well above last year’s quality despite the recent unfavorable weather. As of September 1, 16% of the crop was categorized as “Very poor” and “Poor”, compared to 14% in the preceding week and 52% a year earlier. Meanwhile, 28% of plants fell in the “Fair” category, 1% more than a week earlier and 2% above the same period in 2012. As for the premium quality, 56% of the crop was rated good-excellent, 3% below the previous week and well above last year’s 22%.

According to the Professional Farmers of America, which made a four-day tour of fields in seven Midwest states in the second half of August, soybean output may fall by 3% below USDA’s projections. Soybeans jumped 15% in August as deteriorating weather conditions threatened yields. Meanwhile, corn production might contract by 2.2% below the government agency’s 13.763 billion bushels forecast but it is still expected to be record high.

According to a Bloomberg survey, the U.S. soybean crop may be 3.13 billion bushels, 3.7% below USDAs August forecast. The government agency will update its projections on September 12.

Elsewhere on the grains market, wheat for December delivery slipped 0.41% to $6.4438 a bushel at 10:48 GMT. Futures held in range between day’s high and low of $6.5138 and $6.4363 a bushel respectively. The grain surged 1.3% on Friday, cutting down its weekly decline to little over 1.1%.

The U.S. Department of Agriculture reported on Tuesday that as of September 1, 6% of the spring wheat crop was categorized as “Very poor” and “Poor”, 1% less than a week earlier. Meanwhile, 24% of plants fell in the “Fair” category, 2% below the preceding week. As for the premium quality, 70% of the crop was rated good-excellent, marking a 3% improvement from the preceding period.