Corn hits two-month low on improved US crop condition

CHICAGO: Chicago corn futures reached a two-month low on Tuesday after a weekly US Department of Agriculture (USDA) report on Monday said the US crop was in better condition than analysts expected.

The Chicago Board of Trade's (CBOT) most-active corn contract settled down 6 cents, or 1.5%, at $4.21 a bushel. Wheat settled down 6-1/4 cents, or 1.4%, at $4.97-1/4 a bushel. Soybeans settled 7-1/2 cents, or 1.1% lower, at $8.96-3/4 a bushel and hit a one-month low.

The USDA crop progress report said 58% of US corn was in good to excellent condition, up one percentage point from last week. Analysts had on average expected 57%.

Traders are on edge about the crop's size and condition after heavy rains caused unprecedented planting delays this spring. They are waiting for the USDA to issue updates on how much corn and soy were planted in a report next month.

"I think we are going to hover around the 56% to 58% range in the good-to-excellent for crops until the August 12 acreage report," said Jim Gerlach, president of A/C Trading.

Gerlach added progress numbers will likely be more accurate once the acreage report comes out.

The USDA's rating for US soybeans was unchanged on the week at 54% good to excellent. Analysts had also estimated 54%.

More rain is expected in the US Midwest in the coming days, but analysts are still uncertain if the showers will benefit crops.

"It's almost like the corn had an arm amputated," said Gerlach. "It's going to take a lot more than some rain to fix this problem."

Traders are also watching the new round of US-China talks this week to settle the trade war that has slashed US soybean exports to China. But dealers were wary about chances of a breakthrough.

"I think we are starting to get a wake-up call when it comes to these trade talks with China," said Gerlach. "Trump has said some things that haven't been very hopeful."

Trump on Tuesday warned China against waiting out his first term to finalize any trade deal, saying if he wins re-election in the November 2020 US presidential contest, the outcome could be no agreement or a worse one.

Trump said China appeared to be backing off on a pledge to buy US agricultural products, which US officials have said could be a goodwill gesture and part of any final pact.