Grain futures extend gains on mostly unfavorable weather

Grain futures continued to advance on Friday on forecasts for unfavorable weather over growing areas in the U.S., South America and Europe. Soybeans slightly gained, while corn and wheat posted a moderate advance.

On the Chicago Board of Trade, soybeans futures for delivery in November rose by 0.30% to a new session high of $12.9788 per bushel at 10:04 GMT, the highest since October 10. Days low stood at $12.8888 per bushel. The oilseed added 1.1% on Thursday and extended its weekly advance to over 2.3% on Friday.

Meanwhile, corn for delivery in December traded at $4.4538 per bushel at 10:14 GMT, up 0.45% on the day, and shifted in a days range between $4.4563 and $4.4238 per bushel. The grain rose by 0.4% yesterday and extended its weekly advance to 2.8% on Friday.

DTN reported on October 17 that the U.S. Midwest will experience near-to-below-normal temperatures and light rains through the next seven days, which will slow the drying process of the corn and soybean crops and delay harvests.

Meanwhile, DTN said that the west-central parts of Brazil need more rain to support the planting and development of soybeans but only some light showers are expected in the next seven days. There is also more rain needed in central Argentinas major corn growing areas but rainfall is expected to remain limited with a small chance for light rains on Sunday.

Corn drew support yesterday after Shanghai JC Intelligence Co. wrote in its website today that China bought 20 cargoes of U.S. corn in October due to higher domestic prices.

Despite the recent rally, corn and soybean traders were bearish for a third week amid ample global supply outlook, a Bloomberg survey showed. This was the longest stretch for corn in a month and the worst run for the oilseed since July. Fourteen out of 25 participants polled expected corn to fall next week, while nine were bullish and two neutral. At the same time, twelve out of 26 analysts surveyed said soybeans will retreat next week, while eleven projected a rise in prices and three were neutral.

Wheat extends gains

Elsewhere on the market, wheat continued to advance and traded at $6.9488 per bushel at 10:15 GMT, up 1.23% on the day. Prices ranged between days high of $6.9688, the strongest level since October 8, and days low of $6.8613 per bushel. The grain added nearly 0.7% on Thursday and extended its weekly advance to 0.4% after adding 1.6% in the preceding two weeks.

Wheat continued to draw support after DTN said yesterday that near-to-below-normal temperatures and light rains in the Northern Plains will continue to delay field work and slow the drying process. Favorable weather in the Southern Plains however will provide suitable conditions to support planting and developing in wheat.

In Argentina, cold weather on Sunday could produce frost and light freeze conditions in the southern wheat areas, potentially damaging heading wheat, DTN said. In Western Europe, a wet and cool weather pattern is currently causing delays to the harvest of summer crops and planting of winter wheat and rapeseed but a warmer trend is expected to begin on Thursday and extend into next week. Ukraine and western Russias current favorable weather is forecast to continue providing suitable conditions during the next seven days, although some low temperatures and showers could occur.

According to a Bloomberg survey of analysts, thirteen out of 24 participants expect wheat to decline next week, the biggest proportion of bears since July 26. Five analysts wagered that prices will jump while six predicted little change. Prices rallied recently on unfavorable conditions in some growing areas and speculations for smaller than expected crops in Ukraine and Russia.

The long-term outlook for the grain however suggests that supplies will exceed demand. The U.S. Department of Agriculture raised its estimate for global wheat production to 708.9 million tons on September 12 from 705.4 million tons in August. Major producers outside the U.S. are projected to reap 211.9 million tons, up from 208.37 predicted in August, and 10% above last years 192.33 million tons. Global consumption was estimated by the USDA to rise by 3.8% this year, trailing the rise in production for a second year in three and expanding inventories by 1.4%.