Sunday April 20, 2014

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U.S. grains ease as crop, supply prospects improve

Wheat, soybeans ease following snows in Corn Belt

U.S. grains edged lower on Monday as crop-friendly snowfall and rains moved across the U.S. Corn Belt and traders squared positions ahead of a major government crop report due later this week.

Wheat futures declined from the one-month high notched last week while soybean futures eased for a second straight session, with bumper harvests in South America also pressuring prices.

Corn futures rose as much as one per cent at the Chicago Board of Trade (CBOT), lifted by ideas that the U.S. Department of Agriculture will confirm the tightest stockpile of the grain in 15 years in the agency's quarterly grain stocks and annual plantings report slated for release at midday on Thursday.

"The entire week's main trading activity will be between 11 a.m. and 2 p.m. (CT) on Thursday," said Citigroup market strategist Sterling Smith. "This is the first big news we've had in a while and that will temper our aggressiveness (ahead of the report)."

Analysts on average expect USDA to peg quarterly corn stocks as the smallest in 15 years and soybean stocks the smallest in nine years. Wheat plantings were estimated to rise one per cent.

Soybeans for May delivery closed 3-1/4 cents lower at $14.37-1/4 per bushel, while CBOT May wheat eased 2-1/2 cents to $7.27-1/4 (all figures US$).

"Beans did a lot of traveling but didn't end up far from home, as interest was hard to come by in front of the USDA reports this Thursday," ABN Amro analyst Charlie Sernatinger said in a note to clients.

CBOT May corn settled seven cents, or one per cent, higher at $7.33-1/4 after earlier trading as low as $7.21-1/2.

Investment funds were said to have bought 7,000 corn contracts and sold 1,000 contracts each of wheat and soybeans.

Overall trading volume was thin and likely to remain so until Thursday's report, analysts said.

More than 30 cm of snow fell in portions of the U.S. Midwest over the weekend, which will replenish the subsoil moisture still short from last summer's most devastating drought in five decades.

However, some areas of the parched southern U.S. Plains received less rain than was anticipated, while bitter-cold temperatures there may have damaged wheat plants emerging from winter dormancy.

"They had a little less than they would have liked in the southwest," said John Dee, a meteorologist for Global Weather Monitoring. "Only two inches of snow fell in southwest Kansas and the Oklahoma and Texas panhandles, but up to a foot of snow fell in northwest Kansas and northeast Colorado."

-- Michael Hirtzer reports on the grain and livestock markets for Reuters from Chicago. Additional reporting for Reuters by Sam Nelson in Chicago.


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