September 11, 2012 / 11:08 AM / 8 years ago

GRAINS-Soy at 2-week low on harvest pressure, pre-USDA caution

* U.S. soy falls for 5th day, harvesting and rain weigh
    * Grain markets cautious before Wednesday's USDA report
    * USDA eyed for extent of supply/demand cuts after drought
    * Wheat market awaits Egypt tender as Black Sea test

 (Updates with European trading, changes dateline from
    By Gus Trompiz and Naveen Thukral
    PARIS/SINGAPORE, Sept 11 (Reuters) - U.S. soybean futures
slipped to a two-week low on Tuesday, falling for a fifth
consecutive session, as quicker-than-expected harvest progress
together with caution in the run-up to closely watched crop
forecasts kept prices under pressure.
    Corn rose slightly but remained close to a six-week low
touched in the previous session as the corn market also stayed
cautious before Wednesday's U.S. Department of Agriculture
estimates that will give a clearer picture of the impact on
supply and demand from the worst U.S. drought in 56 years.
    Wheat edged higher with corn, with operators also awaiting
the outcome of a latest tender by Egypt, the world's top wheat
importer, to see if dwindling Black Sea supply after drought-hit
harvests would shift demand towards other exporting zones.
    Chicago Board of Trade new-crop November soy was down
0.1 percent at $17.17-1/4 a bushel by 1046 GMT. It earlier fell
to $17.10-3/4, a level not hit since Aug. 28.
    December corn edged up 0.4 percent to $7.86-1/4 a
bushel, not far from Monday's six-week low of $7.81.
    The USDA's first update on this year's soybean harvest
showed on Monday that crop was 4 percent harvested, against
expectations for 3 percent. 
    The USDA's weekly crop progress report also showed the
condition of soy plants had improved, reinforcing market
sentiment that some parts of the drought-ravaged Midwest
benefited from rain towards the end of the growing season.
    "Seasonal harvest pressure has helped to bring near-term
futures and cash bids lower in recent days," Societe Generale
analyst Christopher Narayanan said of soybeans. 
    "We expect prices to remain elevated on tight supplies, but
are bearish (against) the current forward curve."
    Both soybean and corn futures have set record highs during
the U.S. summer as drought has slashed harvest prospects at a
time when stocks of the crops were already low.
    Wednesday's USDA supply/demand report will be particularly
scrutinised to see if more swingeing supply cuts are made due to
the drought and to what extent demand has been cooled by surging
    "Everyone is looking forward to the USDA report and we are
likely to see pressure on corn prices ahead of the report as
much of the bad news has been factored in," said Lynette Tan,
investment analyst at Phillip Futures in Singapore.
    Analysts predict the USDA report will show that the worst
drought in 56 years has slashed nearly 5.0 billion bushels off
the corn crop, according to a Reuters poll, or about $40 billion
worth at current prices.
    For soybeans, analysts on average predicted the USDA will
trim its crop forecast to 2.657 billion bushels from 2.692
billion in August. However, there is uncertainty as some expect
a slight increase because of Midwest rains last month.
    Unrelenting demand from exporters and domestic processors
for soybeans could depress projected soy inventories to the
lowest level in 36 years, the poll showed.
    On wheat markets, CBOT Dcember wheat slid 0.3 percent
to $8.91-1/2 a bushel, while November milling wheat in Paris
eased 0.7 percent to 263.50 euros a tonne as it factored in
Wednesday's closing slide in Chicago.
    Analysts continued to see bullish momentum for wheat prices
given drought-reduced supply in Black Sea countries and an
unfavourable start to the growing season in Australia.
   "I think there is still some upside potential as the market
is expecting Russia to take action to limit exports," said Tan.
"We also have Australian wheat crop facing adverse weather."
    Australia cut its forecast for wheat production in the
2012/13 crop marketing year by about 7 percent from its previous
forecast to 22.5 million tonnes, warning that there was a risk
of yields falling further if rains did not arrive in some areas.
    A new import tender being held by Egyptian stage buyer GASC
on Tuesday is attracting attention as the shipping period of
November is thought to give a chance to western European origins
such as France as Black Sea availabilities run low.
    Black Sea origins led by Russia have enjoyed a clean sweep
of sales to GASC so far in 2012/13.
    Russia's government have repeatedly rejected the idea of
imposing grain export limits, but market players widely believe
exports will run dry in the next couple of months whatever
action the authorities take.
    Echoing market expectations, Ukraine's agriculture ministry
said on Tuesday that monthly wheat exports should fall sharply
from November or December as traders deplete an agreed quota
aimed at ensuring stable local bread prices following decline in
the wheat crop. 
    * Prices as of 1044 GMT
  Product                 Last    Change   Pct Move End 2011 Ytd Pct                                        
  Paris wheat             263.50    -1.75    -0.66   195.25    34.96
  London wheat            204.50    -2.00    -0.97   152.25    34.32
  Paris maize             253.00    -2.00    -0.78   196.75    28.59
  Paris rape              514.75    -2.50    -0.48   421.50    22.12
  CBOT wheat              865.50    -2.75    -0.32   652.75    32.59
  CBOT corn               784.25     3.25    +0.42   646.60    21.29
  CBOT soy               1712.50    -0.50    -0.03  1198.50    42.89
  Crude oil                96.56     0.02    +0.02    98.83    -2.30
 * Paris futures in euros per tonne, London wheat in pounds per                
 tonne and CBOT futures in cents per bushel.                               
 (Editing by Himani Sarkar)
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