Grain futures mixed, soybeans advance on smaller crop outlook

Grain futures were mixed on Friday following yesterdays update of USDAs crop forecasts. Wheat and corn made a moderate retreat, while soybeans advanced as the agency trimmed its domestic production outlook.

On the Chicago Board of Trade, soybeans futures for delivery in November rose by 0.25% to $13.9875 per bushel at 9:51 GMT. Prices ranged between days high of $13.9988 per bushel, the strongest level since September 3, and days low of $13.8688. The oilseed rose 2.8% on Thursday following USDAs report and extended its weekly advance to over 2.1% so far.

The U.S. Department of Agriculture trimmed its crop estimate to 3.149 billion bushels this year, down from Augusts 3.255 billion, as a result of recent unfavorable weather conditions, which threatened yields. Analysts surveyed by Bloomberg expected a drop to 3.134 billion bushels. Yields projections were trimmed in nine Midwest states where drought vastly expanded.

The USDA reported a deterioration in the crop condition for a fourth consecutive week this Monday. The government agency said that as of September 8, 16% of the crop was categorized as “Very poor” and “Poor”, compared to 15% in the preceding week and 36% a year earlier. Meanwhile, 32% of plants fell in the “Fair” category, 1% more than a week earlier and the same as the comparable period in 2012. As for the premium quality, 52% of the crop was rated good-excellent, 2% below the previous week and well above last year’s 32%.

Corn extends weekly decline

Elsewhere on the market, corn futures for delivery in December slipped 0.01% to $4.6538 per bushel at 9:49 GMT. Prices ranged between days high and low of $4.6563 and $4.6288 a bushel respectively. The grain plunged 1.3% on Thursday, erasing prior gains and extending its weekly decline to 0.6% after Fridays retreat.

Corn futures declined after the U.S. Department of Agriculture reported that the nation will harvest a record 13.843 billion bushels of corn in 2013, confounding analysts projections for a a drop to 13.641 billion bushels from 13.763 billion estimated in August. Domestic output will be 28% higher than last years drought damaged crop. U.S. corn reserves will total 1.855 billion bushels on August 31, 2014, above the previous estimate of 1.837 billion. Global inventories will surge 24% to a 12-year high, the agency reported.

Michael Pitts, a commodity sales director at National Australia Bank Ltd., said for Bloomberg: “It was certainly above expectations – most people were expecting a cut in corn yields and we had a slight increase there. We’re now at a very ample, sufficient balance sheet for corn. Overall, that will have a negative effect on other grains and oilseeds.”

The USDA reported that corn condition had slightly worsened last week. As of September 8, 17% of the crop was rated very poor-poor, compared to 16% a week earlier and 52% last week. Meanwhile, 29% of plants were categorized as “Fair” from 28% in the preceding week and 26% in 2012. As for the premium quality, 54% of the crop was rated good-excellent, 2% below the previous week and 32% above the same period last year.

Wheat falls

Meanwhile, wheat futures for December delivery fell by 0.51% to $6.4888 per bushel at 9:33 GMT. Prices held in range between days high of $6.5263, the strongest level since September 3, while days low stood at $6.4625 a bushel. The grain rose 0.7% on Thursday but trimmed its weekly advance to 0.2% following Fridays decline.

The USDA reported on Thursday that U.S. wheat reserves before next years harvest will total 561 million bushels, confounding analysts expectations for a drop to 544 million from Augusts estimated 551 million.Global production forecast was raised to 708.9 million tons from 705.4 million estimated last month and 655.2 million last year.

Don Roose, the president of U.S. Commodities Inc. in West Des Moines, Iowa, said for Bloomberg: “Record U.S. prices have encouraged global production of grain, reducing the dominance of U.S. exports on the world markets.

DTN reported on September 12 that rains in the Central/Southern Plains would recharge soil moisture for the next winter-wheat crop. The USDA reported that winter-wheat planting has begun last week and 5% of the crops were planted. This compares to the five-year average of 5% and last year’s 4% during the comparable week.

DTN also said that dry weather in the Northern Plains will improve conditions for the spring wheat harvesting. The U.S. Department of Agriculture reported that spring wheat harvesting has surpassed the five-year average pace but remained below last year’s tempo. As of September 8, 80% of the crop was reaped, marking a 16% advance from the preceding week and going 1% above the five-year average reading. During the comparable period in 2012, 97% of the crop was harvested.