Grain futures higher on South America crop woes, bargain buying

Investing.com - U.S. grain futures regained strength on Wednesday, as heavy losses suffered in recent sessions prompted investors to return to the market to seek cheap valuations.

On the Chicago Mercantile Exchange, soybeans futures for January delivery traded at USD14.1950 a bushel, up 0.75% on the day. The January contract rose by as much as 1.4% earlier in the day to hit a session high of USD14.2838 a bushel.

January soy prices plunged to USD13.9137 a bushel on Tuesday, the lowest level since June 18 as the sell-off sparked by last Friday’s larger-than-expected government forecast for the U.S. soy crop continued.

The U.S. Department of Agriculture raised its estimate on the U.S. soybean crop to 2.971 billion bushels on November 9, up from 2.86 billion bushels projected in October and above expectations of 2.892 billion bushels.

But the drop to a five-month low created bargain buying opportunities for investors unwilling to bet prices will fall further amid concerns over crop conditions in Brazil and Argentina, the world’s second and third largest exporters of the oilseed.

In Brazil, mostly dry weather was forecast in key grain-growing regions across the country for later this week, while excessive rains were forecast in Argentina.

Soybean prices have been on a downward trend in recent weeks, losing nearly 21% since hitting an all-time high of USD17.8888 a bushel on September 4, as U.S. farmers started harvesting soybeans at a brisk pace.

Meanwhile, corn futures for December delivery traded at USD7.2700 a bushel, adding 0.4% on the day. Front-month prices held in a tight trading range between USD7.2412 a bushel, the daily low and a session high of USD7.2838 a bushel.

December corn prices tumbled to a seven-week low of USD7.1062 a bushel on Tuesday.

Last week the USDA estimated that U.S. corn production will total 10.725 billion bushels in the current marketing year, up from a previous forecast of 10.706 billion.  

Corn prices have been under pressure in recent weeks, losing approximately 12% since touching a record high of USD8.4237 a bushel on August 10, as a combination of easing concerns over the pace of the U.S. harvest and worries over slowing demand for U.S. corn dampened the appeal of the commodity.

The U.S. produced 38% of the world's corn last year, making it the both world's largest corn producing nation and the largest exporter of the grain.

Elsewhere, wheat for December delivery traded at USD8.5575 a bushel, gaining 0.55%. The December contract was stick in a tight trading range between USD8.5038 a bushel, the daily low and a session high of USD8.5738 a bushel.

Wheat futures slumped to a four-week low of USD8.4362 a bushel on Tuesday.

The USDA raised its estimate on U.S. wheat ending stocks to 704 million bushels last week, up 7.6% from its October projection of 654 million bushels.

The agency also increased its forecast for global wheat ending stockpiles to 174.18 million tonnes, up from the October estimate of 173 million tonnes and above market expectations of 170.969 million.  

Corn is the biggest U.S. crop, followed by soybeans, government figures show. Wheat was fourth, behind hay.