GRAINS-Soy posts biggest drop in a year as yields surprise
* Soybeans fall by daily trading limit * Wheat tumbles 5 pct * Corn, soybeans lower on U.S. harvest pressure * Yields reported better than expected (Updates with U.S. weekly crop report) By Rod Nickel and K.T. Arasu WINNIPEG, Manitoba, Sept 17 (Reuters) - U.S. soybean futures tumbled the daily trading limit on Monday, posting their biggest percentage drop in nearly a year on selling sparked by anecdotal accounts of better-than-expected harvest yields in the Midwest farm belt. Corn at the Chicago Board of Trade tumbled to a more than two-month low while wheat sank 5 percent under the weight of the soybean market, which was considered to be the strongest fundamentally of the three. Soy's stocks-to-use ratio, a measure of demand, was the lowest in nearly five decades. CBOT November soybeans fell 70 cents per bushel - the most a soy contract can move either way on a trading day under exchange rules - on farmers' accounts of better-than-expected yields in harvesting over the weekend. Some of the better yields were coming from the western Midwest, an area that had remained dry as the worst drought in half a century devastated crops. The northern and eastern parts of the Midwest got beneficial rains in August. Prices for soybeans in the cash markets in Iowa, the top corn and soybean state, fell sharply about two weeks ago, perhaps an early signal that yields would exceed expectations. Traders also attributed the selloff to rains in Brazil, the world's second-largest exporter of soybeans after the United States, as its farmers gear up to plant their crop. CBOT November soy slid 4 percent to $16.69 a bushel and registered the lowest front-month price since Aug. 20. CBOT new-crop December corn sank 4.4 percent, or 34 cents, to $7.48 a bushel and touched the lowest price for a nearby contract since early July. After U.S. trading hours, the U.S. Department of Agriculture's weekly crop progress report showed 10 percent of the soybean crop was harvested as of Sunday, up from 4 percent a week ago and just ahead of the average trade expectation of 9 percent complete. Twenty-six percent of U.S. corn was harvested versus 15 percent a week earlier and slightly better than the expected 24 percent. [ID: December wheat fell 5 percent, or 46-1/4 cents, to $8.78 per bushel. The severe U.S. drought in the Midwest drove nearby corn prices to a record high in early August and pushed soybeans to an all-time top in early September, leading to thoughts that buyers would ration demand in the face of high prices. The U.S. corn crop looks to be the smallest in six years, and the soybean crop the smallest in nine years, the U.S. Department of Agriculture said last Wednesday. But with the harvest advancing, a dismal situation might be improving slightly. YIELDS SURPRISE "There have been reports of yields being better than expected during the harvest over the weekend, and farmers were also selling more corn than expected because they don't want to store grain that is affected by diseases," said Charlie Sernatinger, vice president of sales at ABN AMRO. Trace amounts of aflatoxin, a naturally occurring toxin, have shown up in some of the corn harvested in the United States. Any major outbreak has the potential to snarl the grain-handling system. Jeff Hainline, president of Advance Trading, said he was getting anecdotal accounts of better-than-expected yields from grain elevators and farmers in the Midwest. "It's nothing scientific, but these are people we trust," he said, adding that there were accounts of soybean yields being better than expected in the western Corn Belt. The fields harvested so far show a big variance in corn yields. Analysts said yields averaged from just 5 to 10 bushels per acre in some fields to 160 to 175 bushels in others. Wheat was pulled down by corn, long liquidation and favorable rains in parched areas of Australia. The grain markets got a boost last week from the Federal Reserve's latest economic stimulus plan, but that euphoria has passed and outside markets did not offer the same bullish lift, said Shawn McCambridge, grains analyst with Jefferies Bache in Chicago. Speculators, who cut their net long positions in Chicago grains according to the most recent regulatory data, are responsible for some of the selloff. "From a fund perspective, the upside potential is very limited," McCambridge said. Prices at 2:13 p.m. CDT (1913 GMT) LAST NET PCT YTD CHG CHG CHG CBOT corn 748.00 -34.00 -4.4% 15.7% CBOT soy 1669.00 -70.00 -4.0% 39.3% CBOT meal 503.50 -20.00 -3.8% 62.7% CBOT soyoil 54.98 -1.99 -3.5% 5.5% CBOT wheat 878.00 -46.25 -5.0% 34.5% CBOT rice 1529.00 1.50 0.1% 4.7% EU wheat 260.00 -6.50 -2.4% 28.4% US crude 96.29 -2.72 -2.7% -2.6% Dow Jones 13,542 -51 -0.4% 10.8% Gold 1760.24 -9.22 -0.5% 12.6% Euro/dollar 1.3100 -0.0027 -0.2% 1.2% Dollar Index 79.0150 0.1680 0.2% -1.5% Baltic Freight 663 1 0.2% -61.9% (Additional reporting by Sam Nelson and Julie Ingwersen in Chicago, Editing by Bob Burgdorfer and John Wallace and Carol Bishopric)
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