Winnipeg | Reuters –– U.S. soybean futures dropped on Friday as favourable rains were expected to move into the U.S. Midwest, finishing with a big weekly loss.
An unexpected increase to the U.S. harvest outlook on Wednesday hung over the market, after soybeans, wheat and corn all rebounded in the previous session.
Chicago wheat rose on short-covering and bargain-buying. Corn, which should also benefit from rain, ended only slightly higher and registered a weekly drop after also being hit by a surprise upgrade to the U.S. government’s crop forecast.
The potential for heavier rains than previously forecast in the western Corn Belt from Monday through Wednesday looked favorable for the developing soybean crop, said Terry Reilly, senior commodity analyst at Futures International.
Timely rain also looked to be on the way across the Midwest after Aug. 22, he said.
Other traders said the lack of supportive news after the U.S. Department of Agriculture’s bearish report on Wednesday weighed on soybeans.
Chicago Board of Trade August soybeans fell 14-1/2 cents, or 1.5 per cent, to $9.78-1/2 a bushel, putting the nearby contract down three per cent this week (all figures US$).
“I think the trend over the next couple of weeks is going to be lower just on the U.S. Department of Agriculture report and concerns over China,” said Paul Deane, senior agricultural economist at ANZ Bank.
USDA’s soybean forecast stunned the market, which had been expecting the government to cut production to factor in torrential rain earlier in the season.
The supply shock coincided with jitters about demand from China after the world’s biggest soybean buyer unexpectedly devalued its currency this week.
CBOT September corn added 1/4 cent to $3.64 a bushel, down 2.3 per cent for the week.
CBOT September wheat gained 3-1/4 cents, or 0.6 per cent, to $5.06-1/2 a bushel, despite a forecast of record-large French production.
Chicago nearby wheat posted a 0.8 per cent weekly decline.
Canada is expected to produce 13 per cent less wheat this year after hot, dry weather, according to a Reuters trade survey on Friday.
Reilly said those potential losses already were factored into the market.
— Rod Nickel is a Reuters correspondent covering the ag and mining sectors from Winnipeg. Additional reporting for Reuters by Colin Packham in Sydney and Gus Trompiz in Paris.