U.S. grains: Corn, soy fall on big harvest, hedge pressure

Chicago | Reuters — Chicago Board of Trade corn and soybean futures dropped on Friday, with big crops in focus following a U.S. Agriculture Department report that boosted already-record forecasts for U.S. production.

Wheat futures closed higher after the USDA cut its outlook for domestic supplies in the closely watched report. [Related story]

Corn and soybeans also came under pressure as commercial traders hedged purchases made in the cash market after the commodities briefly spiked following the report.

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“A lot of traders sold that rally, especially producers and hedgers,” said Brian Hoops, president of Midwest Market Solutions, a brokerage and commodities marketing advisory service. “People have not done much hedging this year. They used today’s post-crop report rally as an opportunity to do that.”

CBOT December corn posted the biggest loss, shedding 10-3/4 cents, or 3.1 per cent, to close at $3.34 a bushel (all figures US$). The drop snapped a seven-session streak of gains for corn.

CBOT November soybeans were down 19-1/2 cents at $9.42 a bushel.

USDA pegged the 2014-15 corn crop at 14.475 billion bushels, up from its September forecast of 14.395 billion. The government also raised its average yield outlook to 174.2 bushels per acre from 171.7 bushels.

For soybeans, USDA forecast a 3.927 billion-bushel crop, based on an average yield of 47.1 bushels per acre. That compares with the government’s forecast from last month of 3.913 billion bushels and an average yield of 46.6 bushels per acre.

CBOT December soft red winter wheat gained 5-1/4 cents to $4.98-1/2 a bushel.

“The USDA numbers were a little friendly, and the market basically took back about half of what it lost yesterday, with the fundamentalists thinking we may have done enough damage for now,” Charlie Sernatinger, analyst with ED+F Man Capital, said in a research note.

USDA took its U.S. wheat ending stocks figure down 44 million bushels to 654 million. Analysts were expecting ending stocks of 704 million bushels, based on the average of estimates in a Reuters poll. USDA also cuts its world wheat ending stocks outlook to 192.59 million tonnes.

For the week, CBOT soybeans rose 1.1 per cent, corn rose 3.6 per cent and wheat rose 2.6 per cent.

— Mark Weinraub is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Gus Trompiz in Paris.

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