US wheat down 0.8pc, corn dips on weather outlook

SINGAPORE: Chicago wheat lost ground on Thursday, falling 0.8 percent, while corn and soy slid around half a percent as the agricultural markets took a breather on forecasts of rains in key US producing regions after a strong rally last month.

Cooler temperatures and some light rainfall are expected from the weekend through next week in most of the US Midwest and Plains crop regions, which should bring much needed relief to the crops.

The grain futures rose sharply in August on concerns that the summer heat would cut yields of corn and soybeans, while threatening planting of winter wheat crop.

Corn gained nearly 14 percent last month, the biggest since rallying 18.7 percent in December, while wheat climbed 15 percent, the most since December. Soybean futures rose 6.9 percent.

"I think today's fall has to do with rain and also there is profit-taking as well after the sharp move higher," said Abah Ofon, an analyst with Standard Chartered Bank in Singapore.

"It is natural to see a mild correction as the market digests possible yields numbers."

Chicago Board of Trade benchmark December wheat fell 0.8 percent to $7.85 a bushel by 0320 GMT. November soy lost 0.5 percent to $14.50-1/4 a bushel and December corn also slid 0.5 percent to $7.63-3/4 a bushel.

Warm and hot weather in the US Midwest this week will be replaced by a rapid cool-down next week, providing relief to crops and animals, according to an agricultural meteorologist.

Hot weather in July and a lack of rainfall in several key soybean growing areas in August has led to a weekly drop in crop condition ratings and a drop in forecasts for US crop production this year, especially for corn.

The US Department of Agriculture on Monday said 54 percent of the US corn crop was in good to excellent condition, down from 57 percent a week ago and down from 70 percent a year ago.

Fifty-seven percent of the soybean crop was in good to excellent condition, down from 59 percent a week ago and down from 64 percent a year ago.

Crop forecaster Michael Cordonnier of Soybean and Corn Advisor lowered his 2011 US corn yield forecast to 148 bushels per acre and trimmed his soybean yield forecast to 40.5 bushels per acre. Both were below the USDA's latest estimates.

On Wednesday, bigger-than-expected deliveries of wheat added pressure to that market as traders viewed it as a sign that wheat owners were willing to let go of supplies despite a small winter wheat harvest and a reduction in spring wheat acres.

The wheat deliveries -- 1,552 contracts for the expiring Chicago Board of Trade September contract -- caught the market by surprise.

A firm dollar, which makes the greenback priced commodities expensive for foreign buyers, also weighed on the grain markets. The dollar index rose 0.1 percent.

Copyright Reuters, 2011