September 16, 2009

US soy futures fell nearly 3 percent on Friday (Sep 11) and the benchmark November contract at the Chicago Board of Trade (CBOT) dipped below US$9 a bushel for the first time since July on prospects for a huge US crop.

The US Department of Agriculture (USDA) in a monthly report raised its estimate of the US soy crop to a record 3.245 billion bushels, right in line with trade expectations.

But favourable weather for ripening crops in the Midwest hinted at additional increases later on. USDA pegged the average US soy yield at 42.3 bushels per acre, while CBOT grain traders said they believe the final yield could be closer to 44 bushels.

Traders also noted strong yields from the early harvest under way in the US Mississippi River Delta. The only potential obstacle to a bumper soy harvest would be a cold snap halting growth of the Midwest crop, which is maturing later than normal after a cool summer.

For now, weather forecasts look mild. Soy also faced pressure from a slowdown in demand from China, the top buyer of US soy. China's soy imports in August were down 29 percent from the previous month, Chinese customs data showed. A drop of nearly 4 percent in crude oil prices weighed on the CBOT soy complex as well.

At the CBOT, the benchmark November soy contract settled down 23-1/2 cents at US$9.03 per bushel, after trading below US$9 for the first time in nearly two months.

CBOT corn turned higher late in the day, rebounding from oversold conditions. Corn for December delivery ended up 4-1/2 cents at US$3.19-3/4 per bushel. The front September corn contract, which expires in this week, closed up 5 cents at US$3.14-1/2 after dipping to US$3 and finding support at that psychological threshold.