Grain futures edge lower on ample supply outlook

Grain futures fell on Tuesday amid record high output forecasts, despite USDAs weekly crop progress report on Monday that showed corn and soybeans condition has worsened last week. Corn retreated from a three-week high, while soybeans eased from the strongest level in four weeks. Wheat fell as well.

On the Chicago Board of Trade, corn futures for delivery in September traded at $4.8875 a bushel at 9:43 GMT, down 0.78% on the day. Prices held in range between days high at $4.9413, the highest since August 1, and days low of $4.8775 per bushel. The grain surged 4% on Monday, the most since April 29 but trimmed its weekly advance to 3.1% so far following todays decline.

The U.S. Department of Agriculture said in its weekly crop progress report on Monday that corn silking was nearing completion last week. As of August 18, 97% of the plants were in the silking stage, marking a 3% advance from the preceding week. This was a bit below the five-year average 99% pace and last years 100%.

The grain however marked a 4% daily advance yesterday as the government agency reported that crop condition has worsened last week compared to the previous five-day period but remained a lot better than the 2012 season. As of August 18, 16% of the production was rated very poor-poor, compared to 13% a week earlier and 51% last year. Meanwhile, 26% of corn was categorized as “Fair”, 1% above last week and equaling the previous years reading. As for the premium quality, 61% of the crop was rated good-excellent, marking a 3% decline from the preceding week, but well above 2012s 23%.

On August 12, the USDA trimmed its U.S. corn output forecast to 13.763 billion bushels, 1.3% below its July estimate at 13.950 billion and also less than the 14.036 billion forecast by a Bloomberg survey. Yields are also expected to be lower with the government agency cutting its expectations for 154.4 bushels per acre, which is below last month’s estimate at 156.5 bushels and analysts’ expectations for a 157.7 bushels-per-acre yield. Stockpiles are also poised to drop and will equal 1.837 billion bushels, 6% below July’s 1.959 billion projections.

However, according to Goldman Sachs Group Inc. and Deutsche Bank AG, corn output will be above USDA’s latest forecast and will total 14.14 billion and 14.25 billion bushels respectively, the two groups predicted. Even if the government agency’s projection is met, this year’s harvest will still be a record-high and 28% above 2012′s drought-damaged crop.

Graydon Chong, a grains and oilseed analyst at Rabobank International in Sydney, said for Bloomberg: “We will see upside volatility being driven by adverse weather, particularly for corn, but on the flip side we’ve got these pretty robust crop conditions. They’re still pretty strong numbers.”

Soybeans slide as well

Soybeans also fell on Tuesday amid ample supply forecasts, despite the fact crop condition deteriorated last week. Soybeans futures for delivery in September tumbled to $13.0650 per bushel at 9:46 GMT, down 1.17% on the day. Prices held in range between days high of $13.2663, the highest since July 26, and low of $13.0413 per bushel. The oilseed surged 3% on Monday after the release of USDAs report but cut its weekly advance to 1.8% following todays decrease.

Soybean prices were supported last week as the U.S. Department of Agriculture reported that 1.619 million acres of land that was poised to be sown to soybeans remained unplanted, well above last year’s 159 579 acres. Meanwhile, persisting dry weather across the west-central Midwest for the next 10 days is expected to stress the soybeans and corn crops, MDA Information Systems LLC said on August 16.

At the same time, exports of the grain are rising with 284 000 tons already been sold to China for delivery in the year beginning September 1. The USDA said that U.S. outbound shipments totaled 1.9 million tons in the week ended August 8, above the preceding week’s 1.1 million.

Also supportive for soybeans, the USDA reported on Monday that crop condition has worsened last week. As of August 18, 10% of plants were rated very poor-poor, compared to 9% in the previous week and 37% a year earlier. Meanwhile, 36% were categorized as “Fair”, above the preceding five-day periods 34% and below 2012s 53%. As for the premium quality, 62% of the crop was rated good-excellent, marking a 2% decline from a week earlier but still well above last years 31%.

The U.S. Department of Agriculture trimmed its soybean production forecast to 3.255 billion bushels last Monday, 5% below July’s 3.42 billion estimate, but still 8% higher than a year earlier. Yields expectations were also reduced and now stood at 42.6 bushels per acre, below the previous reading of 44.5 bushels and analysts’ projections for a 43.6 output per acre.

Wheat fall

Meanwhile, wheat fell to $6.3638 per bushel at 9:47 GMT, marking a 0.75% decline. Prices held in range between days high and low of $6.4375 and $6.3625 per bushel respectively. The contract rose 1.5% on Monday but trimmed its weekly advance to 0.8% after todays losses.

The USDA reported on Monday that the winter wheat harvest is nearing completion and has surpassed the five-year average pace. AS of August 18, 96% of the crop was harvested, marking a 4% advance from the previous week. This was above the five-year average pace of 94% and 1% below last years 97%.

As for the spring wheat crop, harvesting fell well behind 2012s pace. As of last week, 18% of the production was harvested, below both the five-year average and last years readings of 38% and 77% respectively. Crop condition remained overall the same compared to a week earlier with 66% of spring wheat categorized as “Good” and “Excellent”. Information about last years quality was not provided.