GRAINS-US corn hits record on eve of key USDA crop report

Fri Aug 10, 2012 2:29am IST

* Record high for CBOT corn futures contract
    * New-crop December corn hits $8.29-3/4
    * Traders position for latest USDA forecast on Friday
    * New-crop November soybeans rise 3 percent on Chinese
buying

 (Updates with closing prices, trader comments)
    By Sam Nelson and Julie Ingwersen
    CHICAGO, Aug 9 (Reuters) - U.S. corn rose 1 percent to a
record high on Thursday and new-crop soybeans rose 3 percent a
day ahead of a key U.S. government report that is expected to
slash production estimates due to damage from the worst drought
in 56 years.
    "People are putting risk premium back in ahead of the USDA
report tomorrow. Early corn yields are making shorts very
nervous. There are a lot of sub-100 bushel yields reported and
that makes people fear the worst," said Dan Cekander, an analyst
for Newedge USA.
    A Reuters poll of 21 analysts this week pegged the U.S. corn
yield at 127 bushels per acre, the lowest since 1997, with
production at a six-year low.
    The U.S. Department of Agriculture (USDA) August crop
report, to be released at 7:30 a.m. CDT (1230 GMT) on Friday,
has taken on extra importance since the department's estimates
will be based on surveys of farmers and its own experts
inspecting fields for the first time since the drought began to
rally prices in mid-June. 
    New-crop December corn futures rose to $8.29-3/4 per
bushel, the highest price ever for a Chicago Board of Trade corn
futures contract and above the previous record of $8.28-3/4 that
was set by the spot September contract three weeks ago.
    CBOT September corn settled up 7-1/2 cents per bushel
at $8.18-1/4 and new-crop December ended up 7-1/4 cents at
$8.23-3/4.
    Most-active November soybeans rose 50 cents to
$16.31-1/4 per bushel and September wheat ended up 13-3/4
cents at $9.13 a bushel.
    Traders were moving or rolling long holdings in front-month
September corn into the December and other new-crop contracts,
in step with the periodic rolling of positions undertaken by a
Goldman Sachs index fund.
    The rolling has lifted December to a nearly 5 cents-per-
bushel premium to September, in sharp contrast to December's
steep discount to September earlier in the summer.
    "The Goldman roll started Tuesday, you have that going on
and the report is tomorrow. Everyone is expecting the corn
number to be pretty friendly," a CBOT trader said.
    
    CHINESE SOY DEMAND
    Soybeans posted the biggest percentage gains on the Chicago
Board of Trade, led by confirmation of fresh sales of U.S.
soybeans to China, the world's top soy buyer, and by
expectations of further Chinese demand at a time of uncertain
U.S. supplies.
    "Beans continue to be driven higher by more new-crop sales
to China," Cekander said.
    The U.S. government on Thursday said China bought 165,000
tonnes of U.S. soybeans, boosting China's total purchases for
the week to 271,000 tonnes. 
    Export traders said China may have purchased five to 10
cargoes of U.S. soybeans on Thursday for September through
December shipment. Each cargo of soybeans holds 55,000 tonnes.
    The spot CIF basis for soybean barges at the U.S. Gulf
jumped to a three-year peak as exporters scrambled for nearby
supplies.
    The flurry of Chinese buying came after most-active CBOT
November soybean futures fell 5 percent last week,
pressured by recent rains and moderating temperatures in the
U.S. Midwest that boosted prospects for late-planted soybeans.
    Global soy supplies are already tight after a drought
slashed South American soy production, steering more export
demand to the United States. Moves in CBOT soybean options
underscored the bullish sentiment, with traders buying $20
November soybean calls.
    "This bean situation has been critical all along because of
strong demand and the drought in South America," one floor
trader said.
    
    RAINS TOO LATE FOR CORN
    Analysts said anecdotal accounts from the corn harvest of
the first few fields in scattered areas of the U.S. Midwest show
yields coming in low. The region accounts for 75 percent of all
the corn and soybeans grown in the United States.
    Modest amounts of rainfall in portions of the Midwest this
week will provide only minimal relief from drought, an
agricultural meteorologist said.
    "There will be some improvement, the cooler temperatures
certainly will help. But most of the Midwest has not had enough
rain for significant improvement," said Andy Karst, a
meteorologist for World Weather Inc.
    "Crops may stabilize or decline a little more the next
couple of weeks," he added.
    Rainfall this week totaled 0.25 to 1.00 inch and was
scattered over about half of the Midwest, but only about 25
percent received the heavier amount.
    "There will be better rains today in the eastern Corn Belt,
and the good news is that high temperatures the next couple of
weeks will be in the 70s to 80s degrees Fahrenheit rather than
100 F," Karst said.
    But "certainly no drought busting rains," he stressed.
       
    FOOD PRICE WORRIES
    Wheat rose more than 1 percent in step with corn and soy and
on crop worries in Russia's lush Black Sea wheat growing belt.
    Soaring corn prices have authorities around the globe
worried about rising food costs, just four years after the food
crisis of 2008 sparked riots in many countries and added to
unrest in Egypt that eventually led to the Arab Spring
uprisings.
    Dry weather has also cast a shadow over grains production in
Eastern Europe, while the monsoon season in India, crucial to
the populous country's agricultural sector, has been weak.
 
 Prices at 3:09 p.m. CDT (2009 GMT)      
                              LAST      NET    PCT     YTD
                                        CHG    CHG     CHG
 CBOT corn                  818.25     7.50   0.9%   26.6%
 CBOT soy                  1694.50    64.50   4.0%   41.4%
 CBOT meal                  538.70    16.80   3.2%   74.1%
 CBOT soyoil                 52.39     0.81   1.6%    0.6%
 CBOT wheat                 913.00    13.75   1.5%   39.9%
 CBOT rice                 1592.00    23.50   1.5%    9.0%
 EU wheat                   266.00     6.25   2.4%   31.4%
 
 US crude                    93.71     0.36   0.4%   -5.2%
 Dow Jones                  13,165      -10  -0.1%    7.8%
 Gold                      1617.10     5.81   0.4%    3.4%
 Euro/dollar                1.2297  -0.0067  -0.5%   -5.0%
 Dollar Index              82.6220   0.2280   0.3%    3.0%
 Baltic Freight                790      -22  -2.7%  -54.5%
    

 (Additional reporting by Michael Hogan in Hamburg, Colin
Packham in Sydney; Karl Plume in Chicago; Editing by Dave
Gregorio, Maureen Bavdek and Bob Burgdorfer)
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