Grain futures lower on stronger dollar and favorable weather

Grain futures marked considerable daily losses on Thursday as the dollar rose against all of its major counterparts and favorable weather conditions in the U.S. Midwest will allow farmers to finish crop planting, which was delayed by rains. The dollar index rose 0.8% to a two-week high of 82.10 after yesterday Bern Bernanke said it is highly possible for Fed to taper its bond purchasing program within the end of the year, provided the needed stable recovery signs. According to Bernanke, Fed’s moves are tied to what happens in the economy and the central bank has no fixed plan, but sentiment points at reducing bond purchases. Bernanke said that if the economy continues to improve in line with Fed’s projections, it would be “appropriate to moderate the monthly pace of purchases later this year”, and end the program as the unemployment rate drops do 7%, which Fed expects to happen around mid-2014.

On the Chicago Mercantile Exchange, corn futures for July delivery lost 0.71% on the day, trading at $6.7713 a bushel. The grain ranged between daily high at $6.7963 and low of $6.7513.

According to a DTN report, drier and warmer weather will settle in the Midwest, the U.S. biggest growing region, that will favor development of late planted crops. That will benefit both corn and soybean crops.

The USDA said U.S. corn stockpiles before the 2014 harvest will total 1.949 billion bushels, well above market projections of 1.829 billion. This fall’s U.S. harvest will also exceed the 13.82 billion bushels expectations and will total 14.005 billion. The record domestic output will more than double inventories before the 2014 harvest, said the agency.

In its crop progress report on Monday, the USDA said that 92% of the nation’s corn crop emerged as of June 16, compared to 85% in the previous week. However, this is lower than the comparable week last year’s complete emerge of the crop and the five-year average of 97%.

The grain’s condition is comparable to last year’s with differences of a minor 1% in the “Poor” and “Excellent categories”. During the week ending June 16, corn of “Very poor” and “Poor” quality stood at 8%, “Fair” was 28% and 64% of the crop fell in the “Good” and “Excellent” sections.

Soybeans drop

Soybeans also marked daily losses. Soybeans futures for July delivery fell 0.66%, standing at $15.1288 a bushel at 11:33 GMT. The oilseed ranged between days high and low at $15.2188 and $15.1188 respectively.

USDAs report on Monday showed soybeans planting fell behind last year’s pace and stood at 85% as of June 16, up from the preceding week’s 71%. However, this is well below last year’s 98% and the five-year average of 91%. Also, soybeans emerged stood at 66% last week, compared to 48% in the preceding period. That is below the 2012 94% figure and the five-year average of 80%.

Tom Pugh, a commodities economist at Capital Economics in London, said by telephone for Bloomberg: “We arent too concerned with the delay in planting. It’s far more important what the weather will be like in the next couple months and during the harvest. That’s going to far outweigh a couple of weeks’ delay.”

Wheat falls as well

Wheat futures also declined, pressured by the stronger dollar and expectations for ample global supply that has been weighing on prices for some time now. On the CME, wheat futures for July delivery dropped 1.35%, trading at $6.9688 a bushel at 11:35 GMT. The grain ranged between days high and low at $7.0488 and $6.9513 respectively.

Increased supply is expected by Australia, Russia and Ukraine’s Black Sea region and Europe. Worldwide wheat output in the 2013-2014 crop year is expected to be 6.1% higher than the preceding period and near the record level of the 2011-2012 season, totaling 695.9 million metric tons of wheat, the USDA said on June 12. Canada is expected to boost its output by 6.6%, Russia by 43% and a 24% jump is expected in Ukraine, which will counter an 8.3% drop in the U.S.