Grain, soybean prices dip despite Informa data

Informa Economics raised its estimate for the US soybean crop less than many investors had expected, and unexpectedly cut its hopes for corn output, but the data provided only temporary relief to crop futures on a weak day for risk assets.

Informa lowered its estimate for the US corn crop by some 450m bushels 10.7bn bushels, citing a yield which it saw at 122.4 bushels per acre, below the previous forecast of 127.0 bushels per acre.

For soybeans, the yield estimate was raised, but by a 0.8 bushels per acre to 37.8 bushels per acre, adding an extra 65m bushels to the crop.

The figures were - unexpectedly - less upbeat than those released by FCStone on Thursday, amid a run of updates by analysts ahead of the next US Department of Agriculture Wasde crop report next week.

'Not as bearish...'

Ahead of Informa's report, Richard O'Brien at RJ O'Brien said "I fear that Informa will confirm larger" output for both crops, while rival broker US Commodities forecast "bearish estimates".

Pre-Wasde corn estimates

FCStone - yield, 124 bushels per acre; production, 10.881bn bushels

Informa Economics: yield, 122.4 bushels per acre; production, 10.738bn bushels

Current USDA estimate: yield, 122.0 bushels per acre; production, 10.706bn bushels

However, after the results, Tregg Cronin at CHS Hedging said that the data were "not as bearish as I thought they'd be", adding that they boded well for investors hoping for a bullish outcome to next week's USDA's Wasde briefing.

"Informa has been above the USDA nine times on corn and soybeans [production] and below only once last 10 years," ahead of November Wasde reports, he said.

Market impact

The immediate market impact in Chicago was to spark a limited revival in crop prices, with wheat, which had been prevented by the weak performance in the row crops from reacting to ideas of further US dryness, returning to positive territory.

Pre-Wasde soybean estimates

FCStone - yield, 39.1 bushels per acre; production, 2.959bn bushels

Informa Economics: yield, 38.6 bushels per acre; production, 2.925bn bushels

Current USDA estimate: yield, 37.8 bushels per acre; production, 2.860bn bushels

However, crops ended lower after US employment data, in beating forecasts, ironically weakened prices of risk assets such as shares and commodities, provoking fears that the Federal Reserve might curb measures to stimulate the economy.

The dollar jumped 0.7% on reduced concerns of easy monetary policy, and the risks of currency debasement that such measures increase.

A stronger dollar reduces the competitiveness of dollar-denominated exports such as many commodities by making them less affordable to buyers in other currencies.For soybeans, Chicago's November lot fell 2.0% to $15.27 a bushel,  with the better-traded January lot showing a 2.2% fall to $15.26 a bushel.

December corn fell by 1.4% to 7.39 a bushel, while December wheat eased 0.2%, to $8.64 a bushel.

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