Grain futures lose ground, soybeans decline on expectations for ample supply

Grains lost ground on Wednesday, with soybeans declining for a second day on speculations a report by the USDA may show ample global output as harvests grow from Brazil to US.

On the Chicago Board of Trade,soybeans futures for settlement in March lost 0.46% to trade at $12.7013 per bushel by 15:37 GMT. Prices swung between day’s high and low of $12.7588 and $12.6812 per bushel respectively. On January 2nd prices touched $12.6262 per bushel, the lowest since November 8th. The oilseed settled last year 8.5% lower.

According to a Bloomberg survey, soybeans inventories will probably total 71.46 million metric tons, when the 2013-14 season ends on October 1st, 1.2% higher than USDAs last month estimate and 19% higher, compared to a year ago. The US Department of Agriculture is scheduled to update its forecasts on January 10th. The survey predicted the US production will reach 3.28 billion bushels, above the USDAs previous estimate. In December, the USDA forecast a record high 88 million tons Brazilian output.

“There is some expectation that inventories for the U.S. and globally will be upgraded in the next USDA report, and this is pushing down the prices,” said Tetsu Emori, a senior fund manager at Astmax Asset Management Inc. in Tokyo.

The weather conditions in Brazil were beneficial for the oilseed, while in Argentina the hot weather maintained the low soil moisture. DTN reported on January 7th that episodes of showers and thundershowers in Brazil, accompanied by warm to somewhat hot weather will favor developing corn and soybeans, along with early harvest in northern Mato Grosso. However, the hot weather trend in Argentina, with temperature highs of 99 to 108 F (37to 42 C), continues to be unfavorable for the corn and soybeans producing regions, as soil moisture remains fairly low in these locations. Wednesday into Thursday night thunderstorms will break the heat wave, but rainfall amounts and coverage are somewhat uncertain. Crops in the producing areas may be under some stress, but there appears to be enough shower chances and breaks in the heat to prevent major stress from occurring.

Elsewhere on the grains market, corn futures for March delivery traded at $4.2038 a bushel by 15:36 GMT, falling 1.41% for the day. Futures held in a range between day’s high and low of $4.2762 and $4.2063 per bushel. On January 3rd prices bottomed at $4.1712 per bushel, the lowest since November 21st. The grain lost nearly 40% in 2013, the steepest annual drop on record, on projections that the global output will surge to 964.3 million tons in the 2013-2014 season, boosted by record production in the US, the world’s top producer.

Wheat down as well

Wheat futures for settlement in March declined by 0.66% to trade at $5.9862 per bushel by 15:40 GMT. Prices jumped to a session high of $6.0712, while day’s bottom was touched at $5.9788 per bushel. On January 2nd, prices touched $5.9588 per bushel, the weakest since May 2012. The grain slumped 22% in 2013, the largest annual decline since 2008, on expectations for a record-high global output of 711.42 million metric tons, according to data by the USDA.

DTN’s January 7th forecast called for some moderation in the Midwest cold wave. After a couple of extremely cold days, the region will go through a transition period. The expected rain in the south and east areas during the end of this week may probably melt the snow cover and may leave the soft red winter wheat crop more vulnerable in case of a new cold outbreak. Meanwhile, no cold weather threats are expected in the Southern Plains growing areas for the next seven days. There is a slight possibility for beneficial rains, but overall the weather will be seasonally dry.