SINGAPORE- Chicago corn futures eased on Wednesday, as the market took a breather after climbing to a one-week high in the previous session on concerns over hot and dry weather in parts of the US Midwest.
Wheat rose for a third consecutive session, although hopes of more grain exports from Ukraine limited gains.
“…traders are nervous with the few dry spots in the Western Corn Belt and a significant drop in corn and wheat conditions this past week,” according to a Hightower report.
“Positioning ahead of the USDA (US Department of Agriculture) report might have added to the positive tone as there is little room for a smaller yield which could tighten the ending stocks situation.”
The most-active corn contract on the Chicago Board of Trade (CBOT) rose quarter of a cent to $6.14-1/4 a bushel, and soybeans slid 0.1 percent to $14.27-1/2 a bushel.
Wheat added 0.5 percent to $7.85-3/4 a bushel.
US weather and crop conditions are a primary concern for the market after the USDA lowered its weekly soybean condition rating and cut its corn rating by more than expected.
The agency said 58 percent of US corn was in good-to-excellent condition, as of Sunday, down 3 points from a week earlier and below the average trade estimate of 60 percent.
Soybeans were rated 59 percent good-to-excellent, in line with estimates, but down a point from a week earlier.
Parts of the Midwest received rain recently, but hot weather forecast for the region this week is expected to continue stressing crops.
The market is awaiting the USDA’s monthly supply and demand forecasts due on Friday.
Progress in releasing vessels stuck at Ukrainian ports, as well as expectations of a record Russian harvest, continued to curb gains in wheat prices.
Two more grain ships left Ukraine’s Black Sea ports on Tuesday, bringing the total to depart from the war-torn country under a safe passage deal to 12.
Commodity funds were net buyers of CBOT corn, wheat, soybean and soymeal futures contracts on Tuesday and net even in soyoil, traders said.
Grain analysts have struggled to anticipate the US government’s corn and soybean yields in past Augusts, but that does not necessarily mean their instincts about actual crop potential were wrong.
The US Department of Agriculture’s August crop report, due on Friday at noon, is notorious for its surprising nature. It has been nine years since USDA’s August corn and soybean yields both fell within the pre-report range of analyst guesses.
But stacked up against final yields, the government seems to have just as many problems in August.
In percentage terms, the average August trade guess for corn yield was closer to the final than USDA’s August forecast in 13 of the last 23 years, and the trade was closer on soybeans in 14 years.
That trend for corn is not as heavy in more recent years than it was earlier this century, but the trade was closer than USDA in August in three of the last four years, excluding 2019.
The trade was closer on soybeans the last three years, but USDA was better in August in the previous four.
Actual magnitudes do not vary much in corn. In absolute percentage terms, the trade’s last five August corn yields deviated an average of 2.6 percent from the final versus USDA at 2.7 percent.
The trade has been distinctly closer on soybeans in August with yields an average of 1.7 percent from the final compared with USDA at 2.3 percent. That suggests analysts’ poor track record may not exactly be deserved, they are just bad at guessing what USDA’s method will produce this month. – Reuters
