Grain futures edge higher following USDA crop progress report

Grain futures rose on Tuesday following yesterdays USDA weekly crop progress report which showed a fifth consecutive deterioration in soybeans condition, while corn harvesting fell well behind last years pace.

On the Chicago Board of Trade, soybeans futures for delivery in November rose by 0.60% to $13.5625 per bushel at 9:34 GMT. Prices held in range between days high and low of $13.5825 and $13.4838 a bushel respectively. The oilseed fell 2.4% on Monday but trimmed its weekly decline to 1.8% following Tuesdays rebound.

Soybeans pared weekly losses after the U.S. Department of Agriculture said in its weekly crop progress report on Monday that soybeans condition has worsened for a fifth consecutive time last week. As of September 15, 18% of the crop was rated very poor-poor, compared to 16% a week earlier and 36% in 2012. Meanwhile, 32% of the plants were categorized as “Fair”, matching the previous weeks reading and 1% above last year. As for the premium quality, 50% of the crop was rated good-excellent, down 2% from the preceding week and well above 2012s 33%.

Joyce Liu, an investment analyst at Phillip Futures Pte in Singapore, said for Bloomberg: “There was deterioration in crop conditions for soybeans because the hot and dry conditions experienced in August had affected the crop significantly and adversely affected yields. It would be difficult for rainfall to help replenish the moisture needed to improve soybeans yields.”

The U.S. Department of Agriculture trimmed its crop estimate to 3.149 billion bushels this year on September 12, down from August’s 3.255 billion, as a result of recent unfavorable weather conditions. Analysts surveyed by Bloomberg expected a drop to 3.134 billion bushels. Yields projections were trimmed in nine Midwest states where drought vastly expanded.

Corn advances

Elsewhere on the market, corn futures for delivery in December surged 1.13% to $4.6238 per bushel at 9:33 GMT. Prices varied between days high and low of $4.6438 and $4.5688 per bushel respectively. The grain fell 0.4% on Monday but rebounded to positive territory on Tuesday and marked a 0.8% weekly advance after falling 7.3% in the preceding three weeks.

The USDA reported on Monday that the corn crop condition also marked a slight deterioration last week. As of September 15, 53% of the plants were rated good-excellent, compared to 54% a week earlier and 24% in 2012. Meanwhile, 18% of the crop was categorized as “Very poor” and “Poor”, 1% above the previous week and well below last years 50%.

The government agency also reported that corn harvesting fell well behind last years pace. As of September 15, 4% of the crop was reaped, compared to the five-year average of 10% and 24% in the comparable period in 2012.

Meanwhile, the report showed that only 22% of the plants were in the mature stage, well below the five-year average 41% and last years 73% during the comparable week.

Despite the bullish statistics, corn has kept falling in the recent weeks and is projected to continue declining as the USDA said last Thursday that the nation will harvest a record 13.843 billion bushels of corn in 2013, confounding analysts’ projections for a drop to 13.641 billion bushels from 13.763 billion estimated in August. Domestic output will be 28% higher than last year’s drought damaged crop. U.S. corn reserves will total 1.855 billion bushels on August 31, 2014, above the previous estimate of 1.837 billion. Global inventories will surge 24% to a 12-year high, the agency reported.

Wheat gains as well

Meanwhile, wheat also gained. On the Chicago Board of Trade, wheat for delivery in December traded at $6.4638 per bushel at 9:26 GMT, up 0.81% on the day. Prices ranged between days high and low of $6.4788 and $6.4138 per bushel respectively. The grain marked a minor advance on Monday and extended its weekly advance to nearly 1% on Tuesday after falling 2.1% in the preceding two weeks.

DTN reported yesterday that recent rainfall in the Southern Plains will help improving moisture for planting the winter wheat crop in some areas. The USDA said in its report that as of September 15, 12% of the crop was planted, matching the five-year average pace and surpassing last weeks 10%. This marked a 7% advance from the preceding period.

DTN also said on September 16 that scattered showers in the Northern Plains may be unfavorable for mature crops and harvesting but that would be a minor concern as it wont be a pattern. The USDA said that as of last week, 90% of the spring wheat crop was reaped, compared to the five-year average of 87%. This marked a 10% advance from the preceding week but fell behind last years 99% of crop harvested.

The USDA reported last Thursday that U.S. wheat reserves before next year’s harvest will total 561 million bushels, confounding analysts’ expectations for a drop to 544 million from August’s estimated 551 million. Global production forecast was raised to 708.9 million tons from 705.4 million estimated last month and 655.2 million last year.

Meanwhile, the Australian Bureau of Agricultural and Resource Economics and Sciences (Abares) said that the grain is expected to extend its decline amid ample global supply outlook. “Wheat production is forecast to increase in most of the major growing regions in the northern hemisphere, particularly the Black Sea area and Europe. The extent of the decline may be less than other varieties of wheat, reflecting a smaller increase in world production of higher protein varieties, including U.S. hard-red winter wheat,” Abares said.