(Reuters) – Chicago soybeans rose on Wednesday after hitting a three-week low, while corn gained following two straight days of losses in positioning ahead of key U.S. crop reports on the extent of damage caused by a devastating drought in the U.S. Midwest.
Funds have been liquidating bullish bets in the markets before the U.S. Department of Agriculture (USDA) world supply/demand and crop production reports due at 1230 GMT on Wednesday.
“We are seeing positioning before the USDA report today with also some political decisions which had an impact on currencies,” said Rabobank analyst Erin FitzPatrick. “Some people have been taking money off the table this week but broadly-based trade estimates are for a reduction in availabilities of grains and oilseeds in today’s USDA report.
“The trade estimates of U.S. production cuts are not huge so there is still potential for the USDA to surprise and give us another bullish report.”
Chicago Board of Trade new-crop November soybeans rose 0.6 percent to $17.12-3/4 a bushel by 1020 GMT after touching a low of $16.96-3/4 a bushel, lowest since Aug. 21.
Chicago December corn rose 0.2 percent to $7.79-1/2 a bushel and December wheat was up 0.03 percent at $8.84 a bushel.
The euro rose on Wednesday, hitting a four-month high against the dollar, after Germany’s top court gave its approval to the euro zone’s new rescue fund.
Analysts polled by Reuters predict the USDA report will show the drought has slashed nearly 5.0 billion bushels from the corn crop, worth about $40 billion at current prices.
Some traders expect the USDA to announce further cuts in soybean and corn estimates, while others suspect the markets have already factored in the worst drought in 56 years.
For soybeans, analysts on average predict the USDA will trim its crop forecast to 2.657 billion bushels from 2.692 billion in August. However, some expect a slight increase from the August figure because of beneficial Midwest rains last month.
“The market is waiting with bated breath today for the U.S. Department of Agriculture,” Germany’s Commerzbank said in a report. “No serious shock is anticipated, as any probable downward revisions should already be priced in.”
Rabobank’s FitzPatrick added: “The extent to which the USDA drops its corn/soybean production and stock numbers for the United States is certainly what most people are looking for. I think the prospects of tighter supplies will continue to keep prices supported.”
Concerned about tightening supplies, French President Francois Hollande on Tuesday proposed the creation of strategic stockpiles of agricultural commodities to prevent extreme price swings on international markets.
HARVESTS
In the wheat market, support again came from tightening supplies in the Black Sea region and dryness curbing yields in Australia.
Egypt, the world’s top wheat importer, bought 235,000 tonnes of wheat from Ukraine, Russia and France on Tuesday, but with Russia’s grip now loosening on the Middle Eastern export market.
Egypt’s tender purchase came amid growing worries Russia and other Black Sea suppliers may restrict exports before the end of the year after a drought slashed production for the second time in three years. But Russia insists it will not curb exports.
Australia, the world’s No. 2 exporter, cut its forecast for wheat production by about 7 percent from its previous forecast to 22.5 million tonnes.
