SINGAPORE: Chicago corn futures ticked higher on Friday, but the market was set for its biggest weekly drop in three years, driven down by expectations of a bigger U.S. crop.
Soybeans gained ground after dropping for the last two sessions, however the market was poised for a weekly loss, falling for four out of five weeks.
The Chicago Board of Trade most-active corn contract is down almost 11% this week, the biggest decline since June 2006. Soybeans have given up nearly 2% while wheat is down around 5%.
The U.S. Department of Agriculture (USDA) surprised the market this week with a higher estimate for corn production despite historic planting delays.
Forecasts for good weather for crop development across much of the U.S. Midwest during the next few weeks cast a bearish tone across the grains markets.
"Weather forecasts look favourable for the crop, but still great conjecture around the crop size and not many believe in the USDA numbers," said Ole Houe, director of advisory services at brokerage IKON Commodities.
"So, I think markets have done too much work to the downside."
The U.S. soybean crush in July topped most trade estimates and surged from a 21-month low in June to the sixth-highest for any month on record, according to National Oilseed Processors Association (NOPA) data released on Thursday.
NOPA members, which handle about 95% of all soybeans processed in the United States, crushed 168.093 million bushels of soybeans in July, the highest-ever for the month and the largest monthly crush since March.
The USDA on Thursday morning reported export sales of old-crop U.S. corn in the week ended Aug. 8 below trade expectations at 56,200 tonnes and new-crop sales within expectations at 307,600 tonnes.
The government said weekly net export sales of soybeans added up to cancellations of 109,800 tonnes for the current marketing year. New-crop soybean export sales totalled a better-than-expected 817,400 tonnes.
Export sales of U.S. wheat were 462,200 tonnes, near the high end of a range of trade expectations.
Strategie Grains has made a sharp increase to its forecasts for European Union production and exports of soft wheat this season, citing strong harvest expectations in France and Britain together with increasingly competitive EU export prices.
The French consultancy now sees 2019-20 soft wheat production in the EU at 142.9 million tonnes, up from 140.6 million tonnes projected in July and 12% above last year's drought-hit crop, it said in a monthly grain report.
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