Grain and oilseed prices revived as Lanworth lowered the bar
further on US corn yield forecast, putting it on course for a 17-year low, and
hopes faded for crop-stabilising rains in the drought-hit Midwest.
Corn for August delivery jumped back above $8.00 a bushel at
one point, with wheat retaking the $9-a-bushel mark and soybeans gaining nearly
3%, as already-poor expectations for the US corn crop took a further knock.
Lanworth - whose forecasts, which employ advanced analysis satellite
imagery, are closely watched by traders – slashed its estimate for the US corn
yield to 122.0 bushels per acre, from an estimate last month of 136.8-157.4
bushels per acre.
Crop prices as of close on Friday
Chicago soybeans, (November): $16.01 ¾ a bushel, +2.1%
Chicago corn (December):$7.93 ¼ a bushel, +2.0%
Kansas wheat (September contract): $9.06 a bushel, +1.8%
Chicago wheat, (September): $8.98 a bushel, +1.6%
Paris wheat, (November): E257.75 a tonne, +0.7%
London wheat, (November): £188.00 a tonne, (+£0.05)
The forecast would represent the weakest result since 1995,
and is lower than estimates from many other analysts, although a crop tour by
broker Doane pegged the yield in Iowa at 117 bushels per acre.
Doane said: "Plants have turned color and in some cases will be ready for harvest within a few weeks.
"The stress has reduced ear counts and ear size resulting in very poor yield potential."
Iowa is the top corn producing state in part because of elevated yields, which average 172.0 bushels per acre last year.
"Lanworth are not the kind of people to look at the
glass half full. But people watch what they say," a commentator at a major
broker told Agrimoney.com.
"It is not just eye in the sky stuff. They back up what
they say from on-the-ground observation too."
Separately, Informa Economics, renowned as a conservative
forecaster, reduced its corn yield estimate to 134 bushels per acre.
Jerry Gidel, at Rice Dairy, said: "That caused a bit of profit-taking, but the market recovered that ground."
Rice Dairy on Thursday, following a crop tour, estimated the yield in southern Illinois at 122 bushels per acre, and at 130 bushels per acre for the state as a whole, the second biggest producer after Iowa.
Earlier this week, University of Iowa agricultural professor
Elwynn Taylor estimated that the market was trading a yield of about 136
bushels per acre, which tallied with his forecast, while a Reuters poll of
analysts pegged the yield at 130.8 bushels per acre.
Lanworth also cut its forecast for the US soybean yield, to 35.7
bushels per acre, which would be the worst result since 2003.
Informa reduced its forecast to 38.5 bushels per acre, in
line with the Reuters figure released earlier this week of 38.6 bushels per
Informa estimated the US soybean harvest at 2.9bn bushels,
with the corn harvest pegged at 11.5bn bushels.
Doane pegged the soybean yield in Iowa, which is also the US top producing state for the oilseed, at 39 bushels per acre, down from a harvest result of 50.5 bushels per acre last year.
Futures got extra support from the removal of some rain from
forecasts for the US Midwest forecast for the one-to-five day horizon, for
which the GFS model had shown a band of rains, of 1-2 inches, running from Iowa
on to Missouri, southern Illinois and western Kentucky.
"The European model does not have this feature, and the new GFS
has taken this band of significant rain out of the forecast all together,"
weather service WxRisk.com said.
The need for moisture was highlighted by the latest US drought
monitor data which showed larger areas of the US branded in "severe" or "extreme"
drought as of July 24 than a week before.
"This is disheartening, considering that rainfall increased
last week in some northern and eastern Midwest crop growing areas," Gail Martell at Martell Crop
"Extreme heat has been the enemy of corn," she said, noting
that US this month's temperatures were "on track to set a new record" for July,
having average 80.1 degrees Fahrenheit so far.