Forexpros – U.S. grain futures were lower during European morning hours on Thursday, as market participants awaited weekly export sales data from the U.S. Department of Agriculture to gauge the strength of global demand for U.S. supplies.
Escalating concerns over scorching heat and dry weather conditions in key grain-growing regions in the U.S. have been fuelling a furious rally in grain prices since mid-June.
Corn prices have surged nearly 50% in the past five weeks, wheat futures soared approximately 49%, while soy prices added 26%.
However, investors cashed out of the market amid concerns high prices may be hurting global demand for U.S. grains.
The USDA will release its weekly report on export sales of U.S. grain supplies later in the day.
Meanwhile, grain traders continued to monitor weather forecasts for key grain-growing regions in the U.S. Midwest.
Updated weather forecasts showed that some rain was in the forecast for the next 10 days in northern and eastern parts of the U.S. Corn Belt. However, concerns remained that the rainfall will not be enough to reverse severe damage to crops in the area.
On the Chicago Mercantile Exchange, corn futures for September delivery traded at USD7.8912 a bushel, shedding 0.65%. Earlier in the day, prices fell by as much as 1.1% to trade at a session low of USD7.8538 a bushel.
Prices touched an all-time high of USD8.2862 a bushel on July 20.
Corn futures came under pressure earlier in the week after updated weather forecasts signaled some much-needed rainfall for corn crops in the northern U.S. Midwest later this week.
But prices recovered Wednesday as market players noted the showers would not totally relieve conditions on drought-stricken crops, which were deemed as irreversible.
Weekly crop progress data from the USDA released earlier in the week showed that 26% of the U.S. corn crop was rated in ‘good’ to excellent’ condition as of July 22, down from 31% the previous week.
Corn prices have surged over the past five weeks amid concerns dry soil in the U.S. corn-belt could strain the development of crops in the region.
The corn crop has less room to benefit from increased rains because it has finished its pollination phase, as opposed to soybeans, which begin flowering in late July to early August.
The U.S. produced 38% of the world’s corn last year, making it the both world’s largest corn producing nation and the largest exporter of the grain.
Elsewhere, soybeans futures for August delivery traded at USD16.7062 a bushel, dropping 1.35%. Prices fell by as much as 1.65% earlier to trade at a daily low of USD16.6538 a bushel.
Prices rallied to a record-high of USD17.7762 a bushel on July 20.
Soybean futures rallied more than 3% in the previous session as traders weighed the impact of recent rainfall on soy crops in the U.S. Midwest, just as they enter their yield-determining phase.
The oilseed will begin flowering in late July to early August, a crucial development stage when stressful weather can severely damage yields.
The USDA said 31% of the soybean crop was rated ‘good’ to ‘excellent’ last week, down slightly from 34% the previous week.
Soy futures have gained sharply in recent weeks, as the same hot, dry weather that boosted corn was seen benefitting soy futures as well. Soybeans are grown in many of the same regions across the U.S. as corn.
Global soybean supplies are already on the decline, as severe drought conditions earlier in the year in major South American growers Brazil and Argentina damaged crops in the region.
Meanwhile, wheat for September delivery traded at USD8.9338 a bushel, slumping 1.1%. The September contract fell by as much as 2.15% earlier to hit a session low of USD8.8363.
Front-month wheat futures hit USD9.4450 a bushel on July 20, the highest since June 26, 2008.
Wheat futures have rallied in recent weeks, tracking strong gains in corn and amid concerns over a disruption to supplies from the Black-Sea region.
Russia is a major wheat exporter and competes with the U.S. for business on the global market. A downbeat Russian crop outlook could boost demand for U.S. supplies, which is the world’s third largest wheat producer and biggest exporter.
Corn is the biggest U.S. crop, valued at USD66.7 billion in 2010, followed by soybeans at USD38.9 billion, government figures show. Wheat was fourth at USD13 billion, behind hay.
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