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Morning markets: USDA data doubts limit corn price losses

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How did they get to that figure?

The headline condition rating for US


, in US Department of Agriculture crop progress report overnight, showed 60% in "good" or "excellent" health, the same as last week, and smack in line with the 10-year average.

That was better than expected by analysts, who had forecast a one or two point dip in the rating, and should in theory have been negative for prices of corn futures.

However, more doubts about USDA officials' sums helped keep the grain ahead in early deals.

'Doesn't add up'

The problem was that the headline rating appeared to defy lower ratings estimates for five of the top six corn-producing states, with drops of five points in the good-and-excellent figure for Iowa and Indiana, and six points for Illinois.

After all, in Iowa, for instance, "hot, humid conditions last week took their toll in the state, with above normal temperatures every day", Paul Deane at Australia & New Zealand Bank noted.

"Preliminary data indicate July was the warmest month in Iowa for almost 30 years."

Paragon Economics and Steiner Consulting added: "Looking at the state level data, it is difficult to see how the national ratings held steady.

"Several lower-acreage states saw good/excellent ratings increase but how they could overcome significant declines in such large corn states is a bit baffling. It doesn't add up."

'A couple more days of heat'

Whatever, such doubts helped limit losses in Chicago corn futures on what might have been expected to be a weak day, with external markets not so helpful despite the approval by Congress of the US debt ceiling plan. (The Senate is still to go.)

Tokyo shares closed down 1.2%, while the


was 0.4% higher against a basket of currencies as of 07:30 GMT (08:30 UK time), making dollar-denominated exports that much more expensive.

West Texas Intermediate


dipped 0.8% to $94.09 a barrel, a setback for crops such as corn, and sugar, used in making biofuels.

The weather forecast also helped with "a couple more days of heat in the central US", as Kim Rugel at Benson Quinn Commodities noted.

Corn stood 0.3% lower at $6.84 a bushel for the benchmark December lot, with the lesser-traded September contract down 0.3% at $6.79 a bushel.

Deteriorating grains

That allowed Chicago's September wheat contract to rebuild some premium, adding 0.4% to $6.79 ½ a bushel, helped by some more bullish crop condition data to counteract the depressing effect of low Russian export prices and some better news for Australian growers.

"Much-needed rain is currently forecast across many of the driest regions" of New South Wales and Queensland over the weekend, Luke Mathews at Commonwealth Bank of Australia said.

The percentage of the US spring wheat crop seen in good or excellent health tumbled by four points to 70%.

Indeed, there was something of a theme of grains other than corn deteriorating, with


good and excellent rating edging one point lower to a poor 55%, and


tumbling five points to 72%.



figure fell there points to a dismal 24%, from 69% a year ago.

Chicago oats added 0.1% to $3.46 a bushel for September delivery, while Minneapolis spring wheat gained 0.6% to $8.39 ¼ a bushel.

Cotton recovery?



were boosted by a dip of two points, to 60%, in the proportion of the US crop rated good or excellent.

"Condition declined a little more than trade expected," Mr Rugel said, pointing out a 10-point slump in the rating for the Kentucky crop.

The oilseed gained 0.2% to $13.64 ½ a bushel for November delivery, with the near-term August crop doing better, up 0.6% at $13.66 ½ a bushel.

But the report was less bullish for


, edging the rating on the crop higher by one point to 30%, its highest for weeks, if still a poor figure, and far lower than the 66% recorded a year ago.

New York cotton for December tumbled 2.0% to 103.00 cents a pound.


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