(Reuters) – U.S. grain and soybean futures stumbled on Tuesday on projections for the U.S. Department of Agriculture to increase crop production and supply estimates in key reports on Friday.
The decline was a turnaround from early gains in the markets that were linked to concerns about bitterly cold U.S. weather hurting dormant wheat crops, stalling grain movement and increasing demand for livestock feed.
Prices pulled back as the USDA, in the highly anticipated reports, is expected to increase its estimates for global corn and soybean ending stocks and for U.S. corn and soy production, traders said.
“There is a very clear bearish bias for corn,” said Rich Nelson, chief strategist for Allendale.
Chicago Board of Trade March corn ended down 1-3/4 cents at $4.26 a bushel, while March soybeans lost 3/4-cent to $12.76 a bushel.
World corn inventories are projected to increase by 0.5 percent to 163.2 million tonnes, while world soybean inventories are projected to expand by 1.3 percent to 71.53 million tonnes, according to a Reuters poll of analysts.
The USDA is expected to increase its estimate for U.S. corn production by 0.6 percent to 14.066 billion bushels and its estimate for U.S. soybean production by 0.6 percent to 3.279 billion bushels, analysts said.
WHEAT RETREATS
CBOT wheat prices retreated after approaching a two-week high on Monday on concerns about freezing temperatures hurting dormant crops in the U.S. Midwest and Plains.
Overnight temperatures were low enough to put about 5 percent of the soft red winter wheat crop at risk, said Joel Widenor, an agricultural meteorologist with Commodity Weather Group.
However, some traders shrugged off the threat. The biggest determinant of wheat yields is spring rains, Nelson said.
“We’ve seen crops come back from devastation and come back to normal yields, many, many times,” he said.
CBOT March wheat slid 3-1/4 cents to $6.02-1/2 a bushel, while Kansas City Board of Trade March wheat gained 1-1/4 cents to $6.45-1/4 a bushel.
Commodity funds sold an estimated 4,000 corn contracts and 3,000 wheat contracts at the CBOT, traders said.
CHINA BUYS SOYBEANS
Traders were “ignoring” a sale of 350,000 tonnes of U.S. soybeans to China for the 2013/14 marketing year, which began on Sept. 1, said Karl Setzer, commodity trading advisor for MaxYield Cooperative.
The large sale was unexpected, as some traders recently were worried that China would cancel purchases of U.S. soybeans in favor of South American soybeans.
“People were expecting cancellations and instead of cancellations, we’re getting more sales,” said Jim Gerlach, president of A/C Trading.
China is the world’s top soybean importer. Prices at 3:00 p.m. CST (2100 GMT)
