Grain futures lower on favorable weather conditions

grains_rice_soybean_corn_wheatGrain futures broadly fell on Friday amid forecasts for favorable weather that would benefit corn and soybean harvests and planting and developing of winter wheat. Corn declined further on speculations the U.S. government may scale down the mandate on the use of corn-based ethanol.

On the Chicago Board of Trade, soybeans futures for delivery in November fell for a fourth day in five and traded at $12.8250 per bushel at 9:45 GMT, down 0.40%. Prices held in range between days high and low of $12.8788 and $12.8138 a bushel respectively. The oilseed rose by 0.05% on Thursday and extended its weekly decline to over 1% after Fridays retreat.

Soybeans remained pressured as weather agencies predicted a drier trend to continue providing favorable conditions for harvest after the process was delayed recently by heavy rains. DTN however reported on October 9 that there is risk for heavier rainfall to occur during the weekend or early next week, which would recharge soil moisture but delay harvests.

Losses however were limited amid expectations for higher U.S. exports in the fourth quarter amid waning supplies from South America. DTN said on Wednesday that dry weather continued to hinder the planting progress in the northern growing areas of Brazil and there was a limited chance for rains in the next five to seven days. The South American country is the second top producer and third biggest exporter of the oilseed.

Oil World, a Hamburg-based oilseed researcher, said earlier in the week that exports from the United States may rise to 20 million tons in the last three months of the year, compared to 19.2 million and 14.3 million tons in the fourth quarter of the previous two years. The U.S. will need to step up outbound shipments to satisfy global demand after the nation shipped only 5.83 million tons in the six months to September, compared to 15.2 million and 10.4 million tons in the comparable periods in 2012 and 2011.

Edward de Wismes, an agricultural futures broker at Aurel BGC in Paris, said yesterday for Bloomberg: “China is said to have bought a few cargoes of U.S. beans for December and January shipment earlier in the week and Mexico is also shopping for U.S. beans, so the cash market is supporting the futures in the short term.”

Corn at 3-year low

Corn also retreated on the day as the dry trend in the Midwest is expected to allow harvests in most areas to pick up. The USDA said in its latest WASDE report that the nation will harvest a record 13.843 billion bushels of corn in 2013, 28% above last-years drought damaged crop. The next forecast update was scheduled for today but will be delayed due to the lapse of government funding.

Corn futures for December settlement fell by 0.88% to $4.3413 a bushel at 9:39 GMT. The grain plunged to a 38-month low of $4.3313 per bushel, while days high stood at $4.3688. The contract fell by 1.1% on Thursday and extended its weekly decline to 2.1%.

The grain was also pressured amid speculations that the U.S. government will scale back the mandate on the use of corn-based ethanol. Bloomberg reported that the Environmental Protection Agency might cut the mandate to 13 billion gallons from 13.8 billion a year earlier, which would curb the grains demand prospects.

Wheat with minor decline

Elsewhere on the market, wheat retreated slightly as favorable weather in the Southern Plains provided suitable conditions for planting and developing of winter wheat, DTN said on October 9. Meanwhile, a drier trend and higher temperatures in Ukraine and western Russia are expected to improve conditions for the delayed summer crop harvests and winter wheat planting.

The grain was well supported recently as wet weather in the Black Sea Region threatened to decrease production in Russia and Ukraine. Ukraine’s national weather center in Kiev said on September 27 that the nation’s winter-wheat planting may be 30% lower than expected following record rainfall.

Meanwhile, Russia’s agriculture Minister Nikolai Fedorov said this week that his country may plant only 13 million hectares of wheat next year, down from previously projected 16.4 million.

On the Chicago Board of Trade, wheat futures for delivery in December fell by 0.21% to $6.8375 per bushel at 9:48 GMT. Prices held in range between days high of $6.8538 and low at $6.8238 a bushel, the weakest level since October 2. the grain declined by 0.7% on Thursday, a third straight daily retreat, and extended its weekly fall to over 0.4%.

The market was supported yesterday after Egypt sought to purchase at least 60 000 tons of wheat for delivery between November 21 and November 30, Mamdouh Abdel Fattah, the vice chairman of Egypt’s General Authority for Supply Commodities, said for Bloomberg yesterday. Egypt, the worlds biggest importer, last bought 235 000 tons of wheat from Russia, Ukraine and Romania on September 10. is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover Forex, Price Action and Social Trading.

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