U.S. grains: Corn tops one-week high on expectation for harvest cut

Chicago | Reuters –– U.S. grain and soybean futures edged higher on Thursday, with corn topping a one-week high, on expectations that the U.S. Agriculture Department will trim its domestic harvest estimates in highly anticipated reports due out on Friday.

Analysts expect USDA, in the monthly reports, to cut its corn and soybean production and yield projections from August due to unfavourable weather, including hot and dry conditions in parts of the U.S. Midwest. Forecasts for U.S. ending stocks of each crop also are expected to decline.

Traders are concerned about the size of the crops because prices have tumbled over the past year due to massive harvests in 2014. Export demand for crops like soybeans and wheat also has been weak because of stiff competition from other countries.

“Traders are eagerly awaiting tomorrow’s USDA data dump,” said Kevin Van Trump, chief executive officer of Missouri consultancy Farm Direction.

At the Chicago Board of Trade, December corn advanced 5-1/4 cents, or 1.4 per cent, to $3.74-1/4 a bushel (all figures US$). Earlier in the session, the contract rose to $3.74-3/4, its highest since Aug. 31.

November soybeans gained 1-3/4 cents, or 0.2 per cent, to $8.74 a bushel. December wheat rose 5-3/4 cents, or 1.1 per cent, to $4.78.

Traders were squaring up positions before the USDA reports as early harvest results have indicated corn yields are coming in lower than expected. In parts of Illinois and Indiana, yields are down from last year’s record returns, they said.

“The trade seems to be sitting here and looking for a fairly sizeable reduction in the yield” by USDA, Van Trump said. “That means any type of ‘unchanged’ yield data will be viewed as bearish.”

USDA will probably cut its U.S. corn production estimate to 13.599 billion bushels from its August estimate of 13.686 billion, with an average yield of 167.6 bushels per acre, down from 168.8 bushels, according to a Reuters poll of analysts.

The poll showed the agency cutting its U.S. soybean production estimate to 3.869 billion bushels from 3.916 billion and lowering its average yield estimate to 46.4 bushels per acre from 46.9 bushels.

USDA’s crop reports are due at 11 a.m. CT on Friday.

At 7:30 a.m. CT, the agency is set to issue separate data on last week’s export sales of U.S. grains and soybeans.

Tom Polansek reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Naveen Thukral and Sybille de La Hamaide.

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