Home / Markets / Markets Analysis / Corn market / Corn starts mixed, soybeans higher

Corn starts mixed, soybeans higher

08/07/2012 @ 10:03am

U.S. corn futures are trading mixed Tuesday, as traders wait for key government crop reports on Friday to provide new estimates on the U.S. crop's size and demand levels.

The worst U.S. drought in decades has ravaged the corn crop this summer, leading analysts and the U.S. Department of Agriculture to cut forecasts for what was once expected to be a record harvest. But after a price surge, signs of reduced corn demand have stalled the futures rally and raised uncertainty about whether prices need to go higher to further limit demand for tight supplies.

In electronic trading, Chicago Board of Trade futures for September delivery are down 1/4 cent at $8.02 3/4 a bushel. December corn is up 1/4 cent at $8.05 1/4 a bushel.

Prices could be volatile this week as market participants position themselves ahead of U.S. Department of Agriculture reports due Friday morning, traders said. Traders will watch to see how much the USDA cuts its forecasts of the U.S. corn crop's yield and of demand for exports, ethanol production and animal feed.

Traders are also watching weather forecasts. Although the corn crop is mostly too late in its development to benefit significantly from rains, rainfall could still benefit soybean crops, which could also weigh on traders' confidence in higher corn prices. On Monday, corn futures fell due to better-than-expected weekend rains benefiting the U.S. soy crop.

Rains are set to move across most of the Corn Belt from Tuesday to Friday, passing over Iowa and parched areas of Illinois and Indiana. Hot temperatures in those states will cool as the rains come through.

For early next week, the National Weather Service forecasts above-average temperatures in Minnesota, Nebraska, Iowa and most of Missouri. It also forecasts above-average chances of rain in the Dakotas, Minnesota and northern Wisconsin, but below-average chances of rain in Missouri, Illinois and Indiana.

The U.S. Department of Agriculture on Monday said 23% of the corn crop was in good-to-excellent condition, down from 24% a week ago. It also reported 50% of the corn crop was rated as poor-to-very-poor, up from 48%. The changes were roughly in line with analysts' expectations, as the drought in the Midwest has continued to lower expectations for the crop.


Write to Owen Fletcher at owen.fletcher@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 07, 2012 10:05 ET (14:05 GMT)
DJ U.S. CORN: Trading Mixed; Waiting for USDA Reports Friday->copyright


U.S. soybean futures are trading higher Tuesday morning, boosted by expectations that government forecasters will reduce production estimates for the U.S. crop later this week.

Chicago Board of Trade August soybeans are up 6 1/2 cents, or 0.4%, at $16.14 a bushel.

The CBOT November contract, reflecting expectations for this autumn's harvest, is up 10 3/4 cents, or 0.7%, at $15.95 a bushel.

Soybean futures are stabilizing following a 2.9% decline in the front-month contract Monday, when traders took profits in the wake of higher-than-expected weekend rainfall in the Midwest. The wetter weather appeared to improve prospects for a soybean crop that is undergoing its critical growth phase this month.

But traders say there remains considerable uncertainty about the soybean crop amid the most widespread U.S. drought since the 1950s.

In a crop-progress report Monday afternoon, the U.S. Department of Agriculture said the percentage of the soybean crop rated in good to excellent condition held steady with the prior week at 29%, while 39% of the crop was rated poor to very poor, up two percentage points from a week earlier.

The rise in the amount of crops in poor to very poor condition should support soybean prices, but traders' main focus this week is the USDA's monthly crop report due Friday, said Dax Wedemeyer, an analyst with brokerage U.S. Commodities in West Des Moines, Iowa.

Traders anticipate a modest reduction in government forecasts for U.S. soy production, reflecting the risks posed by crop stress from extreme heat across the Midwest through the summer. The USDA is scheduled to release the report at 8:30 a.m. EDT Friday.

Weekend rains that covered two-thirds of the Farm Belt and forecasts for scattered showers to continue to move through the region this week should aid soybean yields, said Mr. Wedemeyer. Still, traders are taking a wait-and-see approach, evaluating how the rains will benefit soy production.

U.S. soybean crops are setting pods before filling them out with beans, a stage when weather has a strong effect on eventual yields. Much of the soybean crop will be approaching the end of its pod-setting phase in about a week, and after that point rains will mainly determine how large the beans grow inside soy plants' pods.

The USDA, in Monday's crop-progress report, reported 71% of U.S. soybean crops were in their pod-filling stage as of Sunday.

Meanwhile, investors and buyers of physical soybeans maintain that U.S. soybean production has no room for error this year, with U.S. inventories already forecast to dwindle to precariously tight levels by 2013.


Write to Andrew Johnson Jr. at andrew.johnsonjr@dowjones.com.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 07, 2012 10:16 ET (14:16 GMT)
DJ U.S. SOY: Trading Higher; Crop Uncertainties Underpin Prices->copyright


CancelPost Comment

mark guildenzoph Why Wait!!! 08/07/2012 @ 6:17pm Let's be honest you don't have to work for the DOA to look outside and see that there expectations of yield was outrageous. Yet here traders pick apart what little edge the corn and soybean prices have come to. Oh yeah nice rain could have used a few of them a month ago, a little late for both crops. Today the big hold off is lets wait until Friday to see the report. Meanwhile they should just keep raising both prices everyday just for demand in2013. Somebody please explain to me why everyone insists that we're in a weather market? People lets just take a minute and realize the truth here, Question is what do we do from here on out to pull through this year. Again I say why wait till Friday start right now and don't stop until other countries can't afford it then no worry on demand.

Report Abuse Reply
MORE FROM DOW JONES NEWSWIRES more +

More Pig Losses Seen, Smithfield Says By: 05/14/2014 @ 7:55am The swine industry is struggling to contain a deadly virus that's sweeping U.S. hog farms…

Senators Turn Up Heat on Railroad Companies By: 05/13/2014 @ 11:39am Four Midwestern U.S. senators add their voices to a growing chorus of farmers, ethanol producers…

Summary of Friday's WASDE Report By: 05/09/2014 @ 2:53pm The following table is provided as a service to Wall Street Journal subscribers in conjunction…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
Scott Shellady: Options 101