Grain futures fall, soybeans decline after biggest rally in a week

Grain futures edged lower on Wednesday and soybeans retreated more than 1% following Tuesdays biggest daily advance in a week as the USDA said in its weekly report that crop condition has deteriorated less than expected last week.

On the Chicago Board of Trade, soybeans futures for November settlement fell to $13.6788 per bushel at 8:53 GMT, down 1.31% on the day. Prices ranged between days high and low of $13.8700 and $13.6538 per bushel respectively. Futures rose 2.2% on Tuesday, the biggest daily gain in a week, but trimmed its weekly advance to 0.8% following Wednesdays retreat.

The oilseed reversed its direction on Wednesday after the USDAs weekly crop progress report showed that crop condition has worsened less than analysts anticipated following the recent unfavorable dry and hot weather. The government agency reported that as of the week ended September 1, 15% of soybeans were rated very poor-poor, compared to 13% a week earlier and 37% last year. Meanwhile, 31% of the crop was categorized as “Fair”, above the preceding weeks 29% and below 2012s 33%. As for the premium quality, 44% of the plants were rated as good-excellent, marking a 4% decline from the previous week, but well above last years 30%.

Graydon Chong, a grains and oilseeds analyst at Rabobank International in Sydney, said for Bloomberg: “We’ve seen a pretty big rally off the back of some concerns of how dry it was in the U.S. particularly for soybeans. We’ll see these little bits of correction when the markets think we’ve rallied too far.”

Meanwhile, corn futures for delivery in December declined by 1.20% to $4.6950 per bushel at 8:29 GMT. Prices ranged between days high and low of $4.7513 and $4.6763 per bushel respectively. The grain slipped 1.5% on Tuesday and extended its weekly decline to over 2.7% so far.

The USDA reported that the corn crop condition also remained fairly unchanged from last week and well above last years quality despite the recent unfavorable weather. As of September 1, 16% of the crop was categorized as “Very poor” and “Poor”, compared to 14% in the preceding week and 52% a year earlier. Meanwhile, 28% of plants fell in the “Fair” category, 1% more than a week earlier and 2% above the same period in 2012. As for the premium quality, 56% of the crop was rated good-excellent, 3% below the previous week and well above last years 22%.

On August 12, the USDA reduced its U.S. corn output forecast to 13.763 billion bushels, 1.3% below its July estimate at 13.950 billion. Stockpiles are also poised to drop and will equal 1.837 billion bushels, 6% below July’s 1.959 billion projections. Soybeans production forecast was revised downward to 3.255 billion bushels, 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.

According to the Professional Farmers of America, which made a four-day tour of fields in seven Midwest states in the second half of August, soybean output may fall by 3% below USDA’s projections. Soybeans jumped 15% in August as deteriorating weather conditions threatened yields. Meanwhile, corn production might contract by 2.2% below the government agency’s 13.763 billion bushels forecast but it is still expected to be record high.

Elsewhere on the grains market, wheat marked a smaller decline as the USDA reported crop condition has improved last week. Futures for December settlement slipped 0.34% to $6.4338 a bushel at 8:43 GMT. Prices held in days range between days high and low of $6.4725 and $6.4375 per bushel respectively. The grain fell by 1.13% on Tuesday and extended its weekly decline to 1.6% on Wednesday.

The U.S. Department of Agriculture reported on Tuesday that as of September 1, 6% of the spring wheat crop was categorized as “Very poor” and “Poor”, 1% less than a week earlier. Meanwhile, 24% of plants fell in the “Fair” category, 2% below the preceding week. As for the premium quality, 70% of the crop was rated good-excellent, marking a 3% improvement from the preceding period.

The agency also reported that harvesting fell behind last years pace, but was near the five-year average tempo. As of September 1, 64% of the crop was reaped, compared to the five-year average of 69%. This marked a 22% advance from the preceding week but was well behind last years 93% of the crop harvested during the comparable week.