SINGAPORE - Chicago soy futures rose nearly 1 percent on Friday, recouping some of the previous session’s losses on short-covering, but the market remains vulnerable to the downside as U.S. farmers make progress harvesting this year’s record crop. Wheat was little changed after sliding on Thursday, under pressure as U.S. exports face stiff competition from cheaper origins, while corn futures were steady.
“Today’s action is a kind of natural short covering type of buying,” said Genichiro Higaki, head of the proprietary fund management team at Sumitomo Corp in Tokyo. “After 20 to 30 cents decline it is not surprising to see the market making 8 to 9 cents recovery.” Chicago Board of Trade soybeans for November delivery rose 0.9 percent to $9.76 a bushel by 0351 GMT, after dropping 2.9 percent on Thursday and December corn rose 0.3 percent to $3.77-¾ a bushel.
Forecasts of warm and dry weather well into next week are what farmers needed after persistent rains during October. The change in weather will also help crops dry down.
Commodity brokerage firm FC Stone cut its estimate for the 2009 U.S. corn harvest but raised its forecast for soybeans. Stone pegged the 2009 U.S. corn crop at 13.004 billion bushels, reflecting an average yield of 164 bushels per acre (bpa) and soybean production at 3.379 billion bushels with an average yield of 44.1 bpa.
The government has forecast an all-time high U.S. soybean crop of 3.250 billion bushels this year. The corn crop is also expected to be a bin buster of 13.018 billion bushels — the second largest ever, trailing only the 2007 harvest of 13.038 billion.
The U.S. Department of Agriculture will update its forecast on Tuesday, and analysts hold mixed opinions about whether the agency will raise or lower its estimates given the slow harvest. Despite the possibility of downward revisions, the numbers are expected to remain big.
“I think yesterday’s action proved that it will be very difficult to maintain soybeans at $10 ahead of the important report next week,” said Higaki. “Looks like private forecasters are still watching and looking at huge crop despite the harvest delay.” The market also noted the situation in China, where soy crushers expect supply from the United States to increase from late November, easing current tightness, after U.S. exporters accelerated cargo loading.
CBOT wheat continues to be pressured by global oversupply which has made U.S. exports uncompetitive. Chicago December wheat rose ¼ cent to $5.12-½ a bushel, after 1.7 percent decline in the previous session. Egypt’s main government wheat buyer passed on U.S. wheat, buying 120,000 tonnes of French and Russian wheat in a snap tender.
