US wheat, corn and soyabean futures all fell around 1 percent on Tuesday because of risk aversion as Europe's debt crisis continued, the dollar strengthened and US prices caught up with falls in Europe on Monday. "The macro factors are dominating the agricultural markets again as the global economy remains on shaky ground," said Jaime-Nolan Miralles, commodity risk manager with INTL FC Stone.
"Overnight US markets are lower as they are playing catch-up with European losses in the Monday session." US markets had been closed for the Labour Day holiday on Monday. A strengthening dollar after Switzerland's central bank stunned markets by setting a floor for the euro/Swiss franc exchange rate also weakened US grains. But concerns over hot and dry conditions in the US Midwest which are threatening to reduce crop yields and tighten global corn supplies still underpinned the agricultural markets.
Chicago Board of Trade benchmark December wheat fell 1.5 percent to $7.63-3/4 a bushel by 1112 GMT and December corn lost 0.9 percent to $7.52-1/2 a bushel. November soyabeans fell 1.1 percent to $14.28-1/2 a bushel. "Losses in the Chicago grain and oilseed complex are following the risk activity that we saw in London and European markets," said Luke Mathews, a commodity strategist at Commonwealth Bank of Australia.
"It is continuation of the general risk aversion which has started to flow through the wider financial markets on Friday." European benchmark wheat in Paris was little changed as Europe's equity markets recovered following the Swiss central bank's decision. The benchmark Paris November contract was down 0.25 euros or 0.1 percent at 206.50 euros a tonne.
"The market's trading both sides this morning and looking for direction from Chicago today," Nolan Miralles said. Fundamental supply concerns continued to support. The market is expecting the US Department of Agriculture to lower is corn output estimate in its monthly world supply and demand report due on Monday, September 12. "Production concerns are very significant for the US corn and soyabean crops," said Mathews.
"We have started to see private estimates suggesting that the US corn crop will be downwardly revised by the USDA next week and on top of that we have seen further adverse weather in the past 48 hours with widespread flooding through Delta states of the United States."
Recent estimates of the US corn crop fell as temperatures heated up last weak. INTL FCStone on Thursday estimated this year's US corn yield at 146.3 bushels per acre (bpa), down 4.5 percent from its previous estimate of 153.2. It put the corn harvest at 12.350 billion bushels, down 5 percent from its August 2 forecast of 13.002 billion.
It also lowered its US soyabean production estimate by 3.6 percent to 3.030 billion bushels from its previous forecast of 3.145 billion. Forecasters said there were some welcome rain in US grain regions over the weekend but it was too little to fully alleviate crop concerns.
"There was some beneficial rainfall over the weekend for late filling corn and soyabeans although it remains quite dry in parts of central Illinois and Indiana," said Mike Palmerino, an agricultural meteorologist with Telvent DTN. A forecast for a record output in Brazil was also weighing on soyabean prices - which rose 1.5 percent last week in the market's fourth straight week of gains.
Brazilian grains analysts Celeres said on Monday it expects the country's 2011/2012 soya crop to reach a record high 75.2 million tonnes, the same forecast as in August. If confirmed, the crop will beat last year's 74.9 million tonnes, the current record. The total area planted with soyabeans is also expected to rise in the 2011/2012 crop year.