US soyabeans hit by Midwest heatwave

Soyabean futures rose and corn fell after the US government revealed a blast of heat in the nation's midsection last month did more damage to the oilseed than the yellow grain.

The US Department of Agriculture lowered its forecast for the domestic soyabean crop to 3.15bn bushels, down 3 per cent from its August estimate and close to market expectations. Surprising the market, the agency modestly raised its estimate of US corn production to 13.8bn bushels, a new record. This bucked consensus estimates of a decrease.

The US is traditionally the world's biggest grain exporter and the outlook for its crop is followed by traders from Chicago to Geneva.

Last month, intense heat combined with dry skies to bake much of the US Midwest, one of the world's key grain-producing regions. Almost a third of the Midwest is now in drought, up from 2 per cent at the start of August, according to the US Drought Monitor.

Agronomists expected the harsh weather would hit soyabeans more than corn, as the former was setting the pods that produce beans while the latter had already gone beyond its crucial pollination stage. The USDA's monthly crop production report "confirms the story we've been hearing, that the soyabeans were in worse shape than the corn", said Chris Narayanan, agriculture analyst at Societe Generale in New York.

CBOT November soyabeans gained 0.3 per cent to $13.62½ per bushel. CBOT December corn sank 3.1 per cent to $4.58 per bushel. CBOT September wheat dropped 1.6 per cent to $6.25 per bushel after the USDA forecast a record global wheat crop of 708.9m tonnes owing to higher production in grain exporting regions including Canada and Europe.

US soyabean markets have been tightened by forward sales to foreign buyers, including China, where the pig industry uses the oilseed as feed. Exports were projected at 1.4bn bushels, up 4 per cent from a year ago, after an extreme drought reduced the US surplus.

Foreign sales of the "new" US soyabean crop committed by the end of August represent more than half of the current export forecast for the new year, USDA said.

In corn, the government said the average field would yield 155.3 bushels per acre, up 0.9 bushels from its previous forecast. "When they went out and looked at fields again, they found more ears than they found last time," said Chad Hart, an economist at Iowa State University.

In the corn belt state of Illinois, for example, USDA surveyors found 29,900 ears per acre, up from 24,000 at the same time last year.

Mr Hart said the jump may have been due to farmers' late start in planting corn this year because of wet weather. This meant stalks matured deeper into summertime.

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