Grain futures edge higher ahead of USDA crops forecast update

Grain futures posted moderate gains on Tuesday amid expectations that the U.S. Department of Agriculture will trim its output forecast on September 12 due to recent unfavorable weather conditions.

On the Chicago Board of Trade, soybeans futures for November delivery rose by 0.34% to $13.5963 per bushel at 11:15 GMT. Prices held in range between days high and low of $13.6138 and $13.4888 per bushel respectively. The oilseed rose by 0.1% on Tuesday, a third daily advance in four, trimming its weekly decline to little over 0.7%.

Soybeans futures rose 13% since the end of July amid forecasts for dry and warm weather that threatened to curb yields. The USDA reported a deterioration in the crop condition for four consecutive weeks. The government agency said on Monday that as of September 8, 16% of the crop was categorized as “Very poor” and “Poor”, compared to 15% in the preceding week and 36% a year earlier. Meanwhile, 32% of plants fell in the “Fair” category, 1% more than a week earlier and the same as the comparable period in 2012. As for the premium quality, 52% of the crop was rated good-excellent, 2% below the previous week and well above last year’s 32%.

Jeffrey Currie, a Goldman Sachs Group Inc. analyst, said for Bloomberg: “August weather is key to setting U.S. soybean yields, with conditions over the month signaling a large cut to expected production. This will limit the recovery in already-tight U.S. inventories and will limit the decline in soybean prices in coming months.”

Meanwhile, corn futures for December settlement rose 0.26% to $4.6963 by 11:09 GMT. Price shifted between days high and low of $4.6988 and $4.6638 a bushel respectively. The grain surged 1.1% on Tuesday, erasing its weekly decline and extending its advance to 0.3%.

The USDA reported that corn condition has also slightly worsened last week. As of September 8, 17% of the crop was rated very poor-poor, compared to 16% a week earlier and 52% last week. Meanwhile, 29% of plants were categorized as “Fair” from 28% in the preceding week and 26% in 2012. As for the premium quality, 54% of the crop was rated good-excellent, 2% below the previous week and 32% above the same period last year.

The USDA is due to update its crop forecasts on September 12. According to a Bloomberg survey of analysts, the agency is expected to trim its August projection for soybeans by 3.7% to 3.13 billion bushels. The USDA will likely cut its corn output forecast by 0.9% to 13.6 billion bushels, which however would still be record high. Corn yield projections will be reduced to 153.7 bushels per acre, down from 154 bushels estimated in August, the survey said. Soybean yields forecast is likely to be trimmed to 41.2 bushels per acre from 42.6 last month.

Elsewhere on the Chicago Board of Trade, wheat for December delivery traded at $6.4813 per bushel at 11:26 GMT, up 0.24% on the day. Prices ranged between days high of $6.4888, the strongest level since September 3, while days low was touched at $6.4575 a bushel. The grain rose by 0.8% on Tuesday and erased its weekly decline following Wednesdays advance.

The USDA reported that spring wheat harvesting has surpassed the five-year average pace but remained below last year’s tempo. As of September 8, 80% of the crop was reaped, marking a 16% advance from the preceding week and going 1% above the five-year average reading. During the comparable period in 2012, 97% of the crop was harvested.

The agency also reported that winter-wheat planting has begun and 5% of the crops were planted. This compares to the five-year average of 5% and last year’s 4% during the comparable week.