GRAINS-U.S. corn rebounds, USDA cuts yields forecasts

SYDNEY, July 12 (Reuters) - U.S. corn rose on Thursday,
recouping part of the losses from the previous session when the
grain fell on improved weather forecasts and after the U.S.
government cut its estimates for crop yields due to the Midwest
drought.
New-crop corn has firmed more than 40 percent in the last
three weeks as the worst Midwest drought since 1988 wilted
crops. The U.S. Department of Agriculture cut its 2012/13 corn
yield estimate by 12 percent on Wednesday, surprising many with
the scope of the reduction.
However, while some updated weather forecast predicted
showers for some U.S. regions, rains are likely to miss the
areas most in need, meteorologists said.

FUNDAMENTALS
* Chicago Board Of Trade December corn rose 1.56
percent to $7.15 a bushel after slipping 1.88 percent on
Wednesday.
* Spot corn rose 0.97 percent to $7.58 a bushel,
having closed down 1.35 percent in the previous session.
* The U.S. Department of Agriculture said the corn crop
will average just 146 bushels an acre, down 20 bushels from its
June estimate and a much more dramatic drop than analysts had
projected. USDA cut its corn harvest projection to 12.97 billion
bushels for 2012/13 - still the third largest on record. The
yield would be the lowest since 2003, although still far higher
than the 85 bushels an acre following the drought of 1988.

* USDA reduced its forecast for corn ending stocks by 37
percent from last month, more than the 32-percent reduction
expected.
* Soybean yields were cut nearly 8 percent to 40.5 bushels
per acre, the second lowest since 2003, due to the drought.

* The USDA cut its forecast for global corn stocks by 14
percent, although inventories will still be the highest in three
years.
* USDA also reduced its estimated carryover stocks of wheat
to 664 million bushels and soybeans to 130 million bushels
soybeans, compared with trade expectations of 718 million
bushels of wheat and 141 million bushels of soybeans.

* USDA cut its forecast of the wheat crop in Russia by 4
million tonnes due to poor yields, in Kazakhstan by 2 million
tonnes because of hot and dry weather in June, and in China by 2
million tonnes due to lower yields.
* Production levels remain under threat as dry weather
continues to plague vast areas of the Corn Belt, where the
majority of the corn was pollinating, a key growth phase when
cobs sprout grain and adequate moisture is essential.
* Some rains forecast for southeast Midwest, possibly
stretching as far as northern Midwest. However, most critical
areas, Iowa and the northern two-thirds of Illinois, are not
going to see too much in the next five days, Global Weather
Monitoring said.
* U.S. ethanol output plunged to its lowest level in nearly
two years last week as soaring corn prices pushed many biofuel
refineries into the red, government data showed on Wednesday.
Ethanol production last week fell 4 percent, or 36,000 barrels
per day to 821,000 bpd, the lowest since the week ending July
23, 2010, according to the Energy Information Administration.

MARKET NEWS
* The dollar gained on Wednesday, pushing the euro to a
fresh two-year low after minutes of last month's Federal Reserve
meeting showed additional asset-buying by the Fed was not
imminent and likely to occur only if U.S. economic conditions
worsened.
* Crude oil futures surged on Wednesday, ending more than 2
percent higher after a volatile session despite a mixed message
from the U.S. Federal Reserve that it may opt for more easing
policies, but only if the economy weakens further.
* The Dow and the Nasdaq lost ground on Wednesday as minutes
from the Federal Reserve's June meeting showed policymakers are
open to the idea of more economic stimulus, but that conditions
might need to worsen first.

DATA/EVENTS (GMT)
0530 India Industrial Output yy Jul
0900 EZ Industrial production yy May
1230 U.S. Jobless claims Weekly
1230 U.S. Export prices Jun
1230 U.S. Import prices Jun
1430 U.S. EIA natural gas stocks Weekly
1800 U.S. Federal budget Jun

Grains prices at 0029 GMT
Contract Last Change Pct chg Two-day chg MA 30 RSI
CBOT wheat 828.50 2.25 +0.27% +26.10% 620.28 72
CBOT corn 715.00 11.00 +1.56% +8.58% 612.43 72
CBOT soy 1530.25 7.75 +0.51% +24.66% 1165.33 71
CBOT rice $15.15 $0.04 +0.23% +3.41% $14.45 55
WTI crude $85.82 $0.01 +0.01% -16.65% $98.38 59
Currencies
Euro/dlr $1.223 -$0.071 -5.49% -6.26%
USD/AUD 1.024 -0.013 -1.21% -1.23%
Most active contracts
Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight
RSI 14, exponential

(Reporting by Colin Packham; Editing by Ed Davies)