GRAINS-U.S. Soy Price Falls as Argentine Crop Outlook Improves

(Reuters) – Chicago soybean futures fell for a second consecutive day on Thursday, weighed on in part by an improving outlook for production in Argentina, while rains in the U.S. spring wheat belt pressured grain prices. The Chicago Board Of Trade most-active soybean contract was down 0.46 percent to $9.27-1/2 a bushel by 1100 GMT, having closed down 0.1 percent on Wednesday.

Argentine farmers will harvest 57.3 million tonnes of soy this season, the Rosario grains exchange said in its monthly crop report on Wednesday, increasing its previous forecast of 57 million tonnes.

“The upward revision of the output by Rosario stock exchange is confirming ample supplies in Argentina,” analysts Agritel said in a market note.

The outlook in Brazilian production has also been improving.

Brazil’s agricultural statistics and supply agency Conab last week raised for the sixth time this year its estimate for the country’s 2016/17 soybean crop, now seen at 113.92 million tonnes, up from 113 million tonnes in May’s forecast.

CBOT wheat fell 0.2 percent to $4.42 a bushel, having closed down 0.4 percent on Wednesday.

“There were concerns about dryness for spring wheat crop but rains are helping ease some of those issues,” said Phin Ziebell, an agribusiness economist at National Australia Bank.

Dealers said further rains are needed amid a sustained fall in the condition of the spring wheat crop.

The U.S. Department of Agriculture assessed the spring wheat crop at 45 percent good-to-excellent as of June 4, down 10 percentage points from a week earlier. Analysts had been expecting a good-to-excellent rating of 53 percent.

European milling wheat futures were higher with December up 0.4 percent at 174.25 euros a tonne.

Dealers said the market was supported by the weakness of the euro, which improved the competitiveness of exports, and concerns that a forecast heatwave across much of western Europe in the next week days could diminish crop prospects.

“The conditions of the crops of the new harvest will have to be closely monitored in the perspective of another heatwave forecast for next week,” Agritel said.

CBOT corn fell 0.5 percent to $3.75 a bushel, having closed down 1 percent in the previous session.

Dealers said a fall in crude oil prices to a six-week low on Thursday contributed to the decline. Corn often tracks moves in the crude oil market due to the use of crops to make biofuels.

“Oil prices have tanked and that is going to keep pressure on corn as there will be less incentive to use it to make ethanol,” Ziebell of National Australia Bank said.