U.S. soy hits almost 3-week high as crop outlook cut
LONDON -- Soybean futures on the Chicago Board of Trade rose to the highest level in almost three weeks on Tuesday, buoyed by a larger-than-expected cut to a U.S. government estimate for new crop yields along with demand from China.
Corn futures also advanced as the U.S. Department of Agriculture downwardly revised its projection for corn yields in the world's top producer. Wheat prices edged higher.
The USDA on Monday cut its U.S. soybean yield estimate to 42.6 bushels per acre from 44.5 bushels.
"The reduction is fair, in our view, as the early stage of development of the (U.S.) soybean crop raises concern (about the threat of frost)," analyst Christina McGloneof Deutsche Bank said in a market note.
The USDA reported earlier this week that just 58 percent of the soybean crop was setting pods, well below a five-year average of 68 percent.
CBOT November soybeans gained 1.0 percent to $12.37 a bushel by 1142 GMT after peaking at $12.40, the highest for the contract since July 25.
"News that China has agreed a major purchase order for U.S. soybeans gave prices an additional boost," Commerzbank said in a market note.
The USDA on Monday confirmed private sales of 853,000 tonnes of U.S. soybeans to China and unknown destinations for delivery in the 2013/14 (Sept/Aug) marketing year.
Corn yields could be raised
The USDA also on Monday cut its forecast for corn yields to 154.4 bushels per acre from 156.5 bushels.
"Dryness in July pointed to a lower corn yield, based on the USDA's regression," McGlone of Deutsche Bank said.
"However, the crop potential is strong and we believe that the corn yield will be revised up in subsequent reports, particularly in Indiana, Nebraska, Illinois and South Dakota," she added.
CBOT December corn rose 3-1/2 cents or 0.75 percent to $4.67-1/2 a bushel.
Wheat prices also increased although gains were tempered by the USDA's forecast that global production would hit a record high of 705.4 million tonnes.
"Wheat prices were hardly able to profit at all from the increases in corn and soybean prices," Commerzbank said in a market note.
CBOT September wheat rose 3-1/2 cents or 0.55 percent to $6.38-1/2 a bushel, while November wheat in Paris edged up 0.50 euro or 0.3 percent to 183.75 euros a tonne.