Chicago | Reuters –– U.S. grain and soybean futures jumped on Tuesday on expectations that the U.S. Agriculture Department (USDA) may lower its domestic harvest estimates at the end of the week.
Short-covering in the markets ahead of the release of USDA crop reports on Friday (Sept. 11) helped lift nearby wheat futures from a five-year low reached on Friday. Still, large global supplies and stiff competition for export business kept a lid on gains.
Traders believe USDA may cut its yield estimates for corn and soybeans in the monthly reports because of unfavourable weather, said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage in Iowa.
Read Also
U.S. pulse group commits to doubling production in five years
The pulse industry in the United States has plans to double production and consumption of pulse crops by 2030, USA Pulses announced at their annual conference held in Spokane, Washington, July 7-10.
Results from the early corn harvest in the mid-South and Delta have already been disappointing, compared with expectations, he added.
“It is possible that a lower yield estimate will trigger a rally in anticipation of Friday’s numbers or possibly prompt a rally after the report Friday,” Pfitzenmaier said.
Last week, condition ratings for the corn and soybean crops likely declined as hot temperatures stressed some plants, analysts polled by Reuters said. Other fields likely started to die off naturally ahead of the autumn harvest.
USDA will update its crop ratings in a weekly report due at 3 p.m. CT.
At the Chicago Board of Trade, December corn advanced 5-1/4 cents, or 1.4 per cent, to $3.68-1/4 a bushel (all figures US$). November soybeans climbed 12-3/4 cents, or 1.5 per cent, to $8.79-1/4.
December wheat gained 7-1/4 cents, or 1.5 per cent, to $4.75 a bushel. The thinly traded front-month wheat contract hit a five-year low of $4.55-1/2 on Friday.
Gains in equity markets helped support prices, with U.S. stocks advancing as investors returned from a holiday weekend after a late rally by Chinese shares lifted global markets.
“Until Friday we can expect to see outside markets and yield reports determine trade direction,” said Karl Setzer, risk management team leader for MaxYield Cooperative in Iowa.
Jitters about Chinese growth have weighed on soybean prices recently as China dominates global demand for the oilseed.
China imported 7.78 million tonnes of soybeans in August, up 29 per cent year-on-year but down 18.1 per cent from July’s record shipments as cheap supplies from South American producers petered out.
In wheat, large global supplies continued to hang over the market. Australian production of wheat and canola will be higher than previously expected in 2015/16, the country’s chief commodity forecaster said.
— Tom Polansek reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Gus Trompiz in Paris.
