Wednesday, 12 September 2012

GRAINS-Soy rises from 3-week low, corn firms ahead of US report

Wed Sep 12, 2012
* U.S. soybeans rise 0.7 pct after hitting 3-week low

* Investors cautious before USDA reports at 1230 GMT

* Market expects USDA to cut corn, soy estimates
By Naveen Thukral
SINGAPORE, Sept 12 (Reuters) - Chicago soybeans rose on Wednesday after hitting a three-week low, while corn gained following two straight days of losses in positioning ahead of key U.S. reports which will shed light on damage caused by a historic Midwest drought.

Funds have been liquidating bullish bets in the markets heading into U.S. Department of Agriculture supply-demand and crop production reports due at 1230 GMT later on Wednesday.

Some traders expect the USDA to announce further cuts in soybean and corn estimates, while others suspect the markets have already factored in the worst drought in 56 years.

"We are expecting a downgrade in soybean production which is mainly based on the area assessment," said Luke Mathews, a commodities strategist at the Commonwealth Bank of Australia.

"It will be the same scenario for corn, abandonment (of acres) is likely to be revised higher for corn, resulting in overall downgrade in production."

Chicago Board of Trade new-crop November soy rose 0.7 percent to $17.13-3/4 a bushel by 0233 GMT after touching a low of $16.96-3/4 a bushel, lowest since Aug. 21.

December wheat added 0.4 percent to $8.87-1/2 a bushel and December corn rose 0.4 percent to $7.81 a bushel.

Analysts polled by Reuters predict the USDA report will show the drought has slashed nearly 5.0 billion bushels from the corn crop, or about $40 billion worth at current prices.

For soybeans, analysts on average predict the USDA will trim its crop forecast to 2.657 billion bushels from 2.692 billion in August. However, some expect a slight increase from the August figure because of beneficial Midwest rains last month.

Concerned about tightening supplies, French President Francois Hollande on Tuesday proposed the creation of strategic stockpiles of agricultural commodities to prevent extreme price swings on international markets.

HARVESTS

The advancing corn and soybean harvests have added pressure to prices as they brought new supplies onto the markets.

The USDA's first update on this year's soybean harvest on Monday showed the crop was 4 percent harvested, which topped the five-year average of 2 percent and expectations for 3 percent harvested.

The USDA also said the condition of soy plants had improved, reinforcing market sentiment that parts of the Midwest benefited from rain last month.

The corn harvest was 15 percent complete, above the five-year average of 5 percent.

In the wheat market, there was support from tightening supplies in the Black Sea region and dryness curbing yields in Australia.

Egypt, the world's top wheat importer, bought 235,000 tonnes of wheat from Ukraine, Russia and France on Tuesday.

It was Egypt's sixth international wheat purchase in a month and the first time it bought wheat since January. The deals came amid growing worries that Russia and other Black Sea suppliers may restrict exports before the end of the year after a drought slashed production for the second time in three years.

But Russia insists it will not curb exports.

Australia, the world's No. 2 exporter, cut its forecast for wheat production by about 7 percent from its previous forecast to 22.5 million tonnes.

 Prices at  0233 GMT
  Contract        Last    Change  Pct chg  MA 30   RSI
  CBOT wheat     887.50     3.75  +0.42%   873.99   44
  CBOT corn      781.00     3.25  +0.42%   767.94   38
  CBOT soy      1713.75    12.25  +0.72%  1587.67   39
  CBOT rice      $14.78    $0.06  +0.37%   $15.46   29
  WTI crude      $97.08   -$0.09  -0.09%   $89.22   67
  Currencies                                               
  Euro/dlr       $1.286   $0.057  +4.64%  
  USD/AUD         1.047   -0.008  -0.81%  
  Most active contracts
  Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight
  RSI 14, exponential

(Editing by Himani Sarkar)

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