Tue Jul 24, 2012
* Grains fall on crop-friendly weather forecast
* U.S. corn, soy crop ratings fall further amid drought
* Rains come too late to prevent yield loss
By Colin Packham
SYDNEY, July 24 (Reuters) - Chicago corn slipped more than 2 percent on Tuesday and soybeans slid more than 3 percent, extending losses from the previous session, as forecasts of rain eased some worries about the U.S. drought and the euro zone debt crisis continued to weigh on risk assets.
The improved weather outlook offset a U.S. government report that showed the condition of the corn and soybeans crops continued to deteriorate, though damage occurred at a slower pace following scattered rains in the eastern part of the Midwest grain belt.
"Overnight we saw a pretty heavy sell-off in all risk assets after the Spanish bonds hit record levels, which managed to spook the financial markets," Michael Creed, agribusiness economist at National Australia Bank said.
"On top of this, there is talk of some rain in the Midwest, which has probably added to the sell-off."
Chicago Board of Trade December corn fell 0.29 percent to $7.83-1/4 a bushel by 0555 GMT, having dropped to as low as $7.69-1/4 a bushel earlier in the session. New-crop corn closed down 1.29 percent on Monday when it hit a record high of $8 a bushel.
Spot corn fell 0.86 percent to $8.07 a bushel, having slid as low as $7.96-1/2 a bushel earlier in the session.
November soybeans fell 1.96 percent to 15.90-1/2 a bushel, having slipped as much as 3 percent in early Asian trading. Soybean prices fell almost 4 percent on Monday, their biggest daily fall since March 2011.
Front-month wheat fell 2.08 percent to $8.93-3/4 a bushel, extending the prior session's more than 3 percent drop.
RAIN FORECAST OFFSETS USDA REPORT
Weather updates on Monday forecast some rain for corn and soybean crops in the northern U.S. Midwest this week and said there is a better chance for crop-friendly weather in the extended outlooks.
The forecasts helped offset a weekly crop condition report from the U.S. Department of Agriculture that rated the corn crop at 26 percent good to excellent condition as of July 22, down 5 percentage points from a week earlier and 1 percentage point below market expectations.
The soybean crop was 31 percent in good-to-excellent shape, down 3 percentage points and within trade expectations.
In Iowa, the top producer of both corn and soybeans, corn ratings declined to 23 percent good to excellent from 36 percent a week ago. Good-to-excellent ratings for Iowa soybeans fell 10 percentage points to 28 percent.
Ratings also dropped in Illinois, typically the second largest production state for both crops. Corn ratings fell to 7 percent good, zero percent excellent in Illinois while soybeans dropped to 13 percent good to excellent from 17 percent.
Scattered rain showers did help boost crop health in Michigan and Wisconsin but ratings fell in North Dakota, South Dakota and Minnesota as the drought effects reached the northwestern stretches of the Corn Belt.
Overall, crop conditions remained at their lowest levels since 1988 but the rate of decline was slowing. Crop ratings were seen stabilising in the next few weeks due to forecasts for improving weather conditions.
While weather forecasts predict an improvement in crop conditions, much of the corn crop was beyond repair as 86 percent of the crop had already reached its key pollination phase of development, a critical stage for determining final yields. Typically, only 59 percent of the corn crop has pollinated by late July.
The damage is likely to drive further cuts in corn and soybeans yield forecasts.
Goldman Sachs on Monday cut its corn yield estimate and raised its three-month projection for corn prices to a record $9 per bushel. It also raised its three-month forecast for soybean prices to a record $20 per bushel.
Grains prices at 0606 GMT
Contract Last Change Pct chg Two-day chg MA 30 RSI
CBOT wheat 893.75 -19.00 -2.08% +36.04% 622.45 63
CBOT corn 783.25 -2.25 -0.29% +18.94% 614.70 67
CBOT soy 1590.50 -31.75 -1.96% +29.57% 1167.33 54
CBOT rice $15.39 -$0.06 -0.39% +5.09% $14.46 61
WTI crude $88.81 $0.67 +0.76% -13.74% $98.48 53
Currencies
Euro/dlr $1.212 -$0.083 -6.37% -7.14%
USD/AUD 1.030 -0.007 -0.64% -0.67%
Most active contracts
Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight
RSI 14, exponential
(Editing by Himani Sarkar and Miral Fahmy)
* Grains fall on crop-friendly weather forecast
* U.S. corn, soy crop ratings fall further amid drought
* Rains come too late to prevent yield loss
By Colin Packham
SYDNEY, July 24 (Reuters) - Chicago corn slipped more than 2 percent on Tuesday and soybeans slid more than 3 percent, extending losses from the previous session, as forecasts of rain eased some worries about the U.S. drought and the euro zone debt crisis continued to weigh on risk assets.
The improved weather outlook offset a U.S. government report that showed the condition of the corn and soybeans crops continued to deteriorate, though damage occurred at a slower pace following scattered rains in the eastern part of the Midwest grain belt.
"Overnight we saw a pretty heavy sell-off in all risk assets after the Spanish bonds hit record levels, which managed to spook the financial markets," Michael Creed, agribusiness economist at National Australia Bank said.
"On top of this, there is talk of some rain in the Midwest, which has probably added to the sell-off."
Chicago Board of Trade December corn fell 0.29 percent to $7.83-1/4 a bushel by 0555 GMT, having dropped to as low as $7.69-1/4 a bushel earlier in the session. New-crop corn closed down 1.29 percent on Monday when it hit a record high of $8 a bushel.
Spot corn fell 0.86 percent to $8.07 a bushel, having slid as low as $7.96-1/2 a bushel earlier in the session.
November soybeans fell 1.96 percent to 15.90-1/2 a bushel, having slipped as much as 3 percent in early Asian trading. Soybean prices fell almost 4 percent on Monday, their biggest daily fall since March 2011.
Front-month wheat fell 2.08 percent to $8.93-3/4 a bushel, extending the prior session's more than 3 percent drop.
RAIN FORECAST OFFSETS USDA REPORT
Weather updates on Monday forecast some rain for corn and soybean crops in the northern U.S. Midwest this week and said there is a better chance for crop-friendly weather in the extended outlooks.
The forecasts helped offset a weekly crop condition report from the U.S. Department of Agriculture that rated the corn crop at 26 percent good to excellent condition as of July 22, down 5 percentage points from a week earlier and 1 percentage point below market expectations.
The soybean crop was 31 percent in good-to-excellent shape, down 3 percentage points and within trade expectations.
In Iowa, the top producer of both corn and soybeans, corn ratings declined to 23 percent good to excellent from 36 percent a week ago. Good-to-excellent ratings for Iowa soybeans fell 10 percentage points to 28 percent.
Ratings also dropped in Illinois, typically the second largest production state for both crops. Corn ratings fell to 7 percent good, zero percent excellent in Illinois while soybeans dropped to 13 percent good to excellent from 17 percent.
Scattered rain showers did help boost crop health in Michigan and Wisconsin but ratings fell in North Dakota, South Dakota and Minnesota as the drought effects reached the northwestern stretches of the Corn Belt.
Overall, crop conditions remained at their lowest levels since 1988 but the rate of decline was slowing. Crop ratings were seen stabilising in the next few weeks due to forecasts for improving weather conditions.
While weather forecasts predict an improvement in crop conditions, much of the corn crop was beyond repair as 86 percent of the crop had already reached its key pollination phase of development, a critical stage for determining final yields. Typically, only 59 percent of the corn crop has pollinated by late July.
The damage is likely to drive further cuts in corn and soybeans yield forecasts.
Goldman Sachs on Monday cut its corn yield estimate and raised its three-month projection for corn prices to a record $9 per bushel. It also raised its three-month forecast for soybean prices to a record $20 per bushel.
Grains prices at 0606 GMT
Contract Last Change Pct chg Two-day chg MA 30 RSI
CBOT wheat 893.75 -19.00 -2.08% +36.04% 622.45 63
CBOT corn 783.25 -2.25 -0.29% +18.94% 614.70 67
CBOT soy 1590.50 -31.75 -1.96% +29.57% 1167.33 54
CBOT rice $15.39 -$0.06 -0.39% +5.09% $14.46 61
WTI crude $88.81 $0.67 +0.76% -13.74% $98.48 53
Currencies
Euro/dlr $1.212 -$0.083 -6.37% -7.14%
USD/AUD 1.030 -0.007 -0.64% -0.67%
Most active contracts
Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight
RSI 14, exponential
(Editing by Himani Sarkar and Miral Fahmy)
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