Forexpros – U.S. grain futures were mixed during European morning hours on Wednesday, as investors readjusted positions ahead of the release of a key monthly U.S. Department of Agriculture report on U.S. grain supplies.
Grain traders are awaiting a closely-watched monthly supply and demand forecast report from the USDA later in the day, which could show a downward revision to U.S. corn and soybean yield estimates.
The USDA’s weekly crop progress report released earlier in the week showed that the recent adverse weather conditions across the U.S. Midwest and Great Plains-region caused significant damage to crops.
Ratings on the U.S. corn and soy crops declined to the lowest levels for this time of year since 1988 last week.
Escalating concerns over scorching heat and dry weather conditions in the U.S. Midwest and Great Plains region have been fuelling a recent rally in grain prices.
Front-month corn has gained nearly 30% since June 1, July-wheat jumped approximately 25%, while front-month soy rose 22% during the period.
Grain traders have been focusing mostly on market fundamentals, such as weather, in recent weeks. Agricultural traders pay close attention to the weather because farmers need favorable conditions to grow large crops.
Updated weather forecasts showed that dry weather was expected to keep stress on U.S. Midwest corn and soybean crops for at least the next few days.
On the Chicago Mercantile Exchange, corn futures for July delivery traded at USD7.6300 a bushel, easing down 0.15%. Front-month prices hit USD7.8550 a bushel on July 9, the highest since June 13, 2011.
The September corn contract traded at USD7.2025 a bushel, adding 0.25%.
The USDA was expected to cut its estimate for this year’s U.S. corn crop to 13.53 billion bushels, down from its June outlook for a record 14.79 billion bushels.
Corn prices have been well-supported in recent sessions amid concerns dry soil in the U.S. corn-belt could strain the development of crops in the region, just as it enters its key pollination phase in the next few weeks.
The next few weeks will be important for the grain, as the crop could face bigger losses if more rain doesn’t come during its pollination phase.
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 July delivery traded at USD16.4275 a bushel, falling 0.55%. Front-month prices hit a fresh all-time high of USD16.7575 a bushel on July 9.
The August soy contract traded at USD15.8638 a bushel, shedding 0.25%.
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, but the key growing phase for soybeans does not start until later in the summer.
Global supplies of the oilseed 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 July delivery traded at USD8.0575 a bushel, declining 0.25%. The front-month contract hit USD8.2350 a bushel on July 9, the highest since May 27, 2011.
The September wheat contract traded at USD8.2325 a bushel, gaining 0.2%.
Wheat futures have rallied sharply in recent weeks, tracking strong gains in corn and amid speculation the USDA will cut its forecast of 2012-13 world wheat production, following downgraded outlooks for crops in several key exporting countries.
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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