U.S. grains: Soy, corn tumble on fund liquidation, better U.S. weather

Chicago | Reuters –– U.S. grain futures tumbled on Thursday, with soybeans falling the most since September and corn the most in a month as investors took profits on weather forecasts for improved planting conditions in the U.S. Midwest’s crop belt.

Wheat snapped a seven-session streak without a loss to shed two per cent amid a broad sell-off in commodities that saw the Thomson Reuters Jefferies Index of 17 commodities falling to a three-week low.

“We’re seeing across-the-board fund liquidation,” said Sterling Smith, futures specialist at Citigroup in Chicago.

Most-active July soybeans fell more than three per cent, or 51-3/4 cents, to $14.61 per bushel (all figures US$). The closely watched July-November soybean spread declined the most in five months.

Traders sold off long positions after the July chart showed a bearish “double top” with futures this week nearing but not surpassing a contract high notched on April 17. Further selling was sparked when prices fell below their 10- and 20-day moving averages.

“We had an emotional reaction to a technical double top,” said Jerry Gidel, analyst at Chicago advisory Rice Dairy. “We’ll wake up tomorrow and realize that this was all a technical move and we still need beans.”

The stockpile of U.S. soybeans is expected to dwindle to a two-week supply by the end of the summer even as Brazil and Argentina harvest bumper crops and shipments of South American beans that were cancelled by top importer China are instead diverted to processors in the U.S.

Corn futures also took a dive as meteorologists forecast warmer and drier weather in the central and southern portions of the Midwest that are expected to provide farmers an opportunity to catch up on behind-schedule corn plantings.

“I think the epicentre is the corn, where you’re looking at favourable planting conditions starting right now in central Nebraska,” Citigroup’s Smith said.

Most-active CBOT July corn futures fell 12 cents to $5.07 per bushel, about a one-week low.

Commodity funds were said to have sold 12,000 soybean contracts, 10,000 corn contracts and 4,000 wheat contracts.

Wheat tour

CBOT July wheat futures had not declined since April 21, rising every day but April 28 when prices finished unchanged. But futures sank about two per cent, or 14-1/4 cents, to $7.07-1/4 per bushel even as an annual crop tour of wheat fields in Kansas said yield prospects were the poorest in 13 years.

Scouts on the Wheat Quality Council’s tour of Kansas projected the state’s 2014 wheat yield at 33.2 bushels per acre, the tour’s lowest projected yield since 2001, following surveys of 587 fields across the state this week.

The tour also estimated total wheat production in the state at 260.7 million bushels. If realized, that would be the smallest production for Kansas since 1996, when the crop was 255.2 million bushels.

“It just keeps getting worse… the Wheat Quality Council crop tour’s findings are confirming that the yields are well down,” said Andrew Woodhouse, grains analyst at Advance Trading Australasia.

The main buyer agency for top wheat importer Egypt announced a tender after the close of trading seeking wheat for shipment in June. The results were expected to be released during the U.S. trading session on Friday.

— Michael Hirtzer reports on agriculture and commodity markets for Reuters from Chicago. Additional reporting for Reuters by Nigel Hunt in London and Colin Packham in Sydney.

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