U.S. grains: Corn drops as rating points to bumper crop

Reuters — Corn futures fell on Tuesday with the U.S. crop reported in the best shape in two decades, reinforcing expectations of a record-large harvest.

New-crop soybeans pared losses and Chicago wheat futures turned mostly higher, despite signs of a big U.S. soybean crop on the way and abundant global wheat supplies.

The U.S. Agriculture Department on Monday bumped up its corn rating, as rains helped crop health in key production states such as Illinois and Nebraska.

“Crop ratings did nothing to dispel” expectations of big corn and soybean crops, said Arlan Suderman, an analyst at Water Street Solutions.

Chicago Board Of Trade December corn dropped 0.7 per cent or 2-1/2 cents to $3.65 a bushel, after sliding one per cent in the previous session (all figures US$).

USDA said in its weekly crop progress and conditions report that 73 per cent of the corn crop was rated good to excellent as of Aug. 24. That was the best late August rating since 1994.

“U.S. corn production is weighing on prices, and yields in the European Union are also coming up well,” said Ole Houe, an analyst at Sydney-based brokerage IKON Commodities.

EU corn yields this season should be nearly 12 per cent above those recorded in 2013, helped by good crop conditions, the EU’s crop monitoring unit said on Monday.

CBOT November soybeans slipped 1-1/4 cents to $10.28 a bushel, partly recovering after earlier setting a contract low of $10.19-3/4 a bushel.

The chance of wetter weather moving into the Mississippi Delta region, which would slow the early soybean harvest, helped new-crop contracts climb off their lows, said Mike Zuzolo, president of Global Commodity Analytics.

The U.S. soybean crop is developing well, however.

U.S. soybeans were rated 70 per cent good to excellent, down one percentage point from a week ago but still the best for late August in 22 years.

“Even though they slipped lower, they still support ideas of a big crop and that’s what we’re factoring into the market,” Suderman said.

September soybeans continued their two-day plunge, touching a nearly four-year low as investors unwound bull spreads ahead of delivery period.

CBOT December wheat gained 0.4 per cent or two cents to $5.56-1/2 a bushel, rebounding off earlier losses that were linked to ample global supplies, technical selling and stiff export competition.

Bearish news that Egypt’s state grain buyer bought 175,000 tonnes of Russian and Romanian wheat, bypassing U.S. supplies, was factored in by late morning, prior to a round of short-covering, Zuzolo said.

— Rod Nickel is a Reuters correspondent based in Winnipeg. Additional reporting for Reuters by Julie Ingwersen and Christine Stebbins in Chicago, Nigel Hunt in London and Naveen Thukral in Singapore.

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