Grain futures mixed, wheat surges on increased demand

Grain futures were mixed on Wednesday with corn declining and soybeans hitting a 16-month low, while wheat gained for a fourth straight day as lower prices fueled a demand increase.

On the Chicago Board of Trade, wheat futures for September delivery traded at $6.5700 a bushel at 11:50 GMT, up 0.24% on the day. Futures gained 0.86% on Tuesday and extended this weeks advance to over 1.1% so far after declining 4.7% the last two.

Wheat extended recent gains as lower prices led to an increase in demand as some countries began to refill stockpiles. Egypt, the worlds largest wheat importer, made a fourth purchase this month, ordering 240 000 tons from suppliers in Romania and Ukraine.

French farm adviser Offre & Demande Agricole said in an e-mail to Bloomberg: “Egypt’s purchase of 240,000 tons of wheat from Romania and Ukraine served as a reminder that international demand should be strong this year.”

Wheat also drew support as Japan lifted a two-month suspension on Oregon white wheat after an unauthorized genetically modified strain was detected growing in Oregon. The Asian country bans sales of food that contains genetically modified crops, which havent been tested and confirmed safe. Japan has now established a system to detect the unapproved strain before shipment from the U.S. The health ministry will also test the imported grain upon arrival. The total amount of inspected for export wheat at U.S. ports rose by 4.9% the last week, indicating surging demand.

In its weekly crop progress report on Monday, the USDA said that winter wheat harvesting narrowed its gap to last year’s pace. As of July 28, 81 of the nation’s crop was harvested, compared to 75% a week earlier and 86% in 2012. This was also 1% below the five-year average of 82%.

As for the spring wheat crop, heading advanced by 9% to 94% as of last week, below the five-year average of 95% and last year’s 99% during the comparable week. Crop condition was overall better compared to last season. As of July 28, 6% of the crop was rated very poor-poor, compared to 11% a year earlier. Results in the “Fair” category were equal at 26% and as for the premium quality, 68% was categorized as “Good” and “Excellent”, above 2012′s 63%.

Soybeans and corn continue to fall

Meanwhile, soybeans and corn continued to fall as weather forecasting models kept pointing at favorable weather conditions for crop growing in key areas. Forecaster DTN said in a report yesterday that cool weather across the U.S. within the next 10 days will support corn pollination, while rains in the Midwest will aid pod-filling soybeans.

On the Chicago Board of Trade, corn futures for September delivery traded at $4.9588 a bushel at 11:53 GMT, down 0.07% on the day. Prices ranged between days high and low of $4.9788 and $4.9300 a bushel respectively. The grain settled 1.33% higher yesterday and snapped a six-day losing cycle, erasing this weeks decline and advancing over 0.8% for the week so far. Corn, the biggest U.S. crop, hit a 34-month low of $4.8837 a bushel on Tuesday.

Corn futures lost 32% this year as the U.S. Department of Agriculture confirmed expectations for reduction in the total output to 13.95 billion bushels, down from 14.005. However, this is still an all-time record high and is 29% higher than last year’s drought damaged crop. This year’s global stockpiles are projected to rise to 150.97 million tons by the end of the 2013-2014 marketing year, 22% more than the previous period.

As for the corn condition, the crop was of the same quality like a week before but a lot better than last year’s drought damaged crop. As of July 28, 11% was categorized as “Very poor” and “Poor”, well below 2012′s 48%. Meanwhile, 26% of the crop fell in the “Fair” category compared to 28% a year earlier. As for the premium quality, 63% was rated good-excellent, well above last year’s 24% during the comparable week.

Meanwhile, soybeans fell to $12.3750 a bushel during early Asian trading, the lowest since February 2012, as weather conditions continued to benefit crop developing. After that a rebound followed and the oilseed traded at $12.4813 a bushel at 11:54 GMT, down 0.10% on the day. Days high stood at $12.5150. The September contract fell 1.87% on Tuesday, a sixth consecutive daily decline and has tumbled over 7.5% so far this week after shedding 9.39% the preceding one.

The oilseed has fallen more than 12% so far this year as the USDA projected domestic output will jump to a record 3.42 billion bushels, which would boost global inventories by 20% to an all-time record high of 74.1 million tons. Goldman Sachs’s 12-month price estimate for soybeans remained at $11 per bushel last week.

The USDA said in its weekly crop progress report on Monday that soybeans blooming advanced last week but was still below last year’s pace. As of July 28, 65% of the crop had bloomed, compared to 46% a week earlier and the five-year average reading of 74%. During the comparable week last year, 87% of the crop had bloomed.

As for the soybeans condition, it was almost the same compared to the preceding week and far better than last year’s quality. As of July 28, 9% of the crop was rated very poor-poor, compared to 37% in 2012. Meanwhile, 28% of soybeans were categorized as “Fair”, below last year’s 34%. As for the premium quality, 63% of the crop was rated good-excellent, compared to 29% during the comparable week in 2012.