By Mark Weinraub
CHICAGO, Aug 5 (Reuters) – U.S. soybean futures fell on Tuesday morning as expectations for a bumper U.S. harvest rose on overnight rains across a broad stretch of the Midwest as well as a USDA report that showed the crop was in better shape than expected, traders said.
The storms, which eased lingering concerns about dry weather during the past few weeks reducing harvest yields, also weighed on corn futures. Wheat futures fell in a profit-taking setback after four straight days of gains pushed prices their highest in more than two weeks.
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The market remained focused on production, with the rain bolstering expectations that huge harvests of both corn and soybeans will replenish depleted supplies at elevators and processors around the country.
“Good rains were seen overnight across a large portion of the Midwest, which did serve to relive some of the weather worries that were lending support to the market,” Sterling smith, futures specialist at Citi, said in a note to clients.
The U.S. Agriculture Department said on Monday afternoon that the soybean crop was rated 71 percent good to excellent, unchanged from a week ago and one percentage point above the average of analysts’ forecasts.
“I think we are seeing the market react to the USDA’s crop condition report, which was higher than expected,” said Andrew Woodhouse, grains analyst at Advance Trading Australasia.
Some private production forecasts added to the bearish tone hanging over the market.
INTL FCStone projected the U.S. 2014 soybean harvest at 3.865 billion bushels, with an average yield of 46.0 bu. per acre, and Farm Futures Magazine estimated the crop at 3.857 billion bu., with an average yield of 46.07 bu. per acre. Both estimates are above USDA’s current forecasts.
For corn, both firms also issued forecasts above the USDA’s outlook, with INTL FCStone estimating U.S. production at 14.455 billion bu., with an average yield of 172.4 bushels per acre and Farm Futures pegging the crop at 14.331 billion bu., with an average yield of 171.06 bu. an acre.
