At this time of year there is generally a bearish sentiment in Chicago grain markets due to the onset of the U.S. harvest, a world bellwether for supply. That is particularly true this autumn as evidence mounts that U.S. farmers will harvest not only their largest soybean crop in history, as the government is currently forecasting, but perhaps a record-large corn crop as well. USDA’s next crop estimates will be issued on Friday.  ”It’s going to be a biggie — the big dominant feature. Where do you want to place your bets heading into those numbers?” said Dan Basse, president of AgResource, a Chicago-based ag markets consultant. Last month, the U.S. Department of Agriculture forecast a 2009 U.S. corn crop at 12.954 billion bushels, with an average yield of 161.9 bushels per acre, and soybean production at 3.245 billion bushels, yielding 42.3 bpa. The record for the U.S. corn crop is 13.074 billion bushels in 2007, and for soybeans, the 3.197 billion bushels reaped in 2006. Two closely watched research firms updated their forecasts last week, with brokerage FC Stone of Des Moines, Iowa, and consultant Informa Economics in Memphis both expecting USDA to boost its crop estimates this Friday.  ”With the private survey guys all showing higher corn and bean production, you’ve got a negative yield psychology all week going into the report,” said Dan Cekander, a grains market analyst at brokerage Newedge USA in Chicago.    That sentiment hit CBOT markets hard on Friday, especially soybeans, which fell below $9 a bushel to a 6-1/2-month low. Sobering U.S. jobs data issued by the U.S. Labor Department on Friday added to bearish sentiment and worries about a recovery in the economy. Employers cut 236,000 jobs in September, far more than the 180,000 that had been expected.    MOTHER NATURE NOT HELPING It is an adage at the Chicago Board of Trade that “big crops get bigger” once the late stages of maturity are reached and corn kernels and soybean pods make a final “fill.” But if there is anything injecting caution to all the bears in the grain markets at the moment, it is the weather. That factor will remain in play as a possible brake on CBOT price weakness the coming week. The Midwest harvest is already running a couple of weeks behind given crop immaturity. But recent rains and forecasts are not likely to to give farmers a bigger harvest window in the coming week.   ”It’s pretty much a supply watch,” Basse said. “When will Mother Nature allow for a combine to roll freely and for the cash markets to be resupplied?”   Most traders expect export announcements to be limited, notably for soybeans with top buyer China on vacation until late in the week. China markets reopen on Oct. 9,following National Day holidays.    WHEAT STRUGGLESWheat continues to struggle with large U.S. and global stocks and slid to new life-of-contract lows on Friday. But the biggest shake-up in wheat came in the spreads, the price differences between futures of various contract months. These differentials jumped and fell violently — and expensively — for speculators as the grain industry, the CBOT and its regulator the Commodity Futures Trading Commission traded ideas back and forth about the best way to improve the hedging performance of the troubled CBOT wheat market. The trigger to the violent moves were competing proposals on the timing of when to adjust storage fees for wheat at CBOT- approved grain elevators. Some shell-shocked spread traders were threatening to file lawsuits by the end of the week.  For the week, the CBOT December wheat fell nearly 2 percent to $4.41-1/4. Benchmark November soybeans fell 4 percent to $8.85 a bushel. December corn was near unchanged at $3.33-1/2.PHOTO: Soybean field near Ames, Iowa, taken Sept. 26 by Christine Stebbins. High pod counts have many expecting a huge U.S. harvest.

U.S. grain markets look to be headed for another week of sideways moves with a lower bias as world grain buyers watch harvest progress of a likely record large American soybean crop and second-largest corn crop. So barring any unusual harvest-time surprises, grain traders will be taking their cue from U.S. weather forecasts.    ”Outside of that there isn’t much,” Randy Mittelstaedt, an analyst with  R.J. O’Brien, said. “We’re just keeping within ranges until there is more clarity. The new  production report next month will help.”     The U.S. Department of Agriculture will update U.S. crop yield estimates, production and supply-demand outlooks Oct. 9. USDA already forecast record corn yields and record soybean output in its monthly report issued on Sept. 11. But meeting those lofty targets is still a question of weather over the next few weeks as crops finish maturing and combines roll.     Delayed planting this year put crops behind from the start, and crop-watchers are not yet ready to bless the bin-busting forecasts on concerns about a possible sudden “killing” frost that could cut off final growth of corn and soybeans.    ”The latest National Agricultural Statistics Service Crop Progress report released Sept. 21 showed that 60 percent of the U.S. soybean crop was still vulnerable to freeze damage and only 21 percent of the corn crop was mature,” Mike Woolverton, a Kansas State University economist, said in his weekly newsletter on Friday. “The greatest lags are in the states most likely to experience frost.”     So frost fears will remain a daily factor. But for some traders the main weather story is shifting focus to harvest conditions, with rain clouds threatening speedy progress. Rains, especially in the far southern edge of the Midwestern Corn Belt where crops are the ripest, have stalled an aggressive early start to harvesting. Further north the crops are still behind. A balmy September has helped speed up maturation, but crops are still lagging.   For the coming week, agricultural meteorologist Mike Palmerino at DTN Meteorlogix, said on Friday that the first half looks dry, but storms may move in by the weekend.    ”I’ll be looking to see if there is rain causing harvest delays, which I think is going to be important for the basis levels,” Anne Frick, an oilseed analyst with Prudential Bache Commodities said, referring to cash market bids by processors and exporters struggling with a 32-year low in U.S. soy stocks. “The question now is getting the crop into usage channels,” Frick said. “Rainfall is the key factor to watch for (this) week.”    U.S. cash markets — always volatile before the harvest replenishes stockpiles — reacted violently to harvest delays  on Friday, as cash basis bids shot up as much as 55 cents at key Midwest soybean processing plants.    The corn market, which has nothing like the current supply tightness in soybeans, is still on a hair-trigger due to fears of a killing frost and weather delays or damage at harvest.   Last week, corn looked set for a test of contract lows near $3 a bushel as price charts appeared weak. But prices shot up on Tuesday with a frost threat and that nervousness remains.    Also in the spotlight this week will be USDA’s quarterly grain stocks report and annual small-grains summary on Wednesday, which will include USDA’s 2009 wheat harvest data. On average, analysts expect the Sept. 1 stocks report to show bigger corn and wheat supplies than a year go amid a slowdown in demand while soy stocks remain extremely tight.   ”Typically the stocks report isn’t a big mover or shaker,” said Don Roose, an analyst with U.S. Commodities in West Des Moines, Iowa. “More important is going to be that October report because we usually have an adjustment on acres for corn and beans.”  Last week, the benchmark CBOT November soybean contract <SX9> fell 1.5 percent to $9.26 a bushel. December CBOT corn <CZ9> ended 5 percent higher at $3.34 while December CBOT wheat <WZ9> fell 1.5 percent to $4.49-3/4.Photo: Northern Illinois soybean field taken Sept. 19 by Christine Stebbins

U.S. grain markets look poised for a week of consolidation with a bias toward moving lower in corn and wheat after a weak futures close last Friday and a decent crop weather forecast for the Midwest.    Prices could get a bump if a near-term threat of a crop-killing frost materializes.     ”Despite the volatility in the weather forecast, the evidence seems to be building that we are going to get frost-free growing weather into early October,” said Rich Feltes, senior vice president of MF Global Research.    That view fed selling on Friday in corn, the biggest U.S. grain crop, with confidence growing that corn yields could be unprecedented. The U.S. Department of Agriculture on Sept. 11, forecast U.S. corn yields would average a record 161.9 bushels per acre. That equates to a 12.954-billion-bushel corn crop, nearing the record high of 13.1 billion harvested in 2007.    Since the USDA forecast, warm, sunny days have given late-maturing crops time to ripen and build yields. Based on the USDA’s last weekly crop update on Sept. 14, up to 20 percent of U.S. row crops were seen still at risk of being damaged by a freeze. Chicago grain prices surged after that update and when a freeze was also forecast for last week.    But by Friday, the markets had calmed as the weather forecasting models backed off the freeze threat and sentiment on the Chicago Board of Trade floor returned to ideas of an average U.S. corn yield as high as 165 bushels per acre.   If some of the lagging states like Illinois, Indiana and North Dakota make it without a frost over the next two weeks, analysts said, yields could grow another two to three bushels an acre. That would relieve any remaining worries about shortages of corn for ethanol producers, livestock producers or exporters for the next year or so.    CBOT corn futures for December delivery fell below a key chart support level of $3.20 late Friday, setting a bearish tone for the week ahead.    ”We really thought it was going to hold $3.20. The market has factored in absolutely zero freeze,” one CBOT broker said.    Traders were now eyeing $3 as key support in December corn. The life-of-contract low is $3.02 and that level could be breached if the heartland has another week of warm weather.    CORN, WHEAT MORE VULNERABLE THAN SOY ”My mode is to still sell rallies in corn and wheat, whereas soybeans … the big unknown here is whether or not the U.S. farmer is going to give us the quantity of beans that we need to meet this record fall export demand program,” Feltes said.    A weak dollar, which hit the lowest level in a year versus the euro on Friday, kept export demand for U.S. soybeans strong. U.S. export bookings for the marketing year that began Sept. 1, reached 17.6 million tonnes as of Sept. 10 — almost double last year’s pace of 9.6 million. China, the top U.S. customer, has bought 10.8 million tonnes, more than double its total for the same period a year ago.   China remained active last week, booking another five cargoes of soybeans, or 303,000 tonnes.    As if to underscore China’s needs — and muscle — that interest came despite a trade dispute between China and the United States that erupted this month after U.S. President Barack Obama slapped a tariff on tire imports from China.    Additionally, traders cited supply concerns with U.S. stockpiles at a 32-year low before harvest. There were rising concerns about delays to soy harvest in the Mississippi Delta area. Rains have been relentless over the past 10 days. Greenville, Mississippi, received nearly 7 inches of rain since Sept. 8, more than 5 inches more than normal for the period, said Mike Palmerino, an agricultural meteorologist with DTN Meteorlogix said Friday.    For the week, the benchmark CBOT November soybean contract <SX9> rose 4 percent to $9.41 a bushel. December corn was basically unchanged, ending at $3.18, while December wheat <WZ9> fell 2 percent to $4.57-1/4 per bushel.PHOTO: Active U.S. harvest nears as soybeans turn golden. Illnois soybean field near the Wisconsin border taken Sept. 19 by Christine Stebbins

The trend in U.S. grain markets in coming days will be dominated by the advancing harvests of what the government estimated on Friday will be a record-large soybean crop and a near-record corn crop. Those billions of bushels will keep a restraining weight on any strong rallies for now, analysts say.***    ***But prices have also already factored in a lot of the new supplies — grain that comes as a relief for world consumers — and markets may keep largely within recent ranges unless there is a big change in the weather for the Midwest crop belt. So far, September in the U.S. Corn Belt has featured warm, sunny days — perfect for ripening corn and soy. But both are still about two to three weeks behind normal due to a cool, wet spring and summer and remain vulnerable to a September freeze.***    ***”Any indication that the longer-term maps are clear of any freezing temperatures or show a switch to freezing temperatures” will drive prices down or up this month, said Brian Basting with Advance Trading, a Bloomington, Illinois, brokerage and farm advisory service.***    ***The latest forecasts look mostly clear for the belt through midweek with balmy temperatures with highs from the mid 70s to low 80s-degrees Fahrenheit — ideal “finishing” weather for row crops from Ohio to Nebraska.***    ***”The threat of any damaging cold weather continues to be pushed further and further away. It looks less and less likely for any damaging freeze in September,” DTN Meteorlogix agricultural meteorologist Mike Palmerino said on Friday.***    ***Good weather usually makes big crops bigger, traders say. In its latest crop report on Friday, the U.S. Department of Agriculture agreed. It raised its forecast for the American corn crop to 12.954 billion bushels, the second-largest in history, and with an average yield of 161.9 bu/acre — a record high. USDA also put the soybean crop at a record high 3.245 billion bushels, reflecting an average yield of 42.3 bu/acre. But after those numbers the grain trade is now thinking the yield could get even bigger — corn to 165 bu/acre and beans perhaps to 44 bu/acre — provided there is no early frost.***    ***SPREADS TO ADJUST? As much as the bin-busting harvests in the offing weigh on prices, the market structure of the Chicago Board of Trade grains will also play into coming price moves. September futures contracts expire at midday on Monday, Sept. 14. Over the summer months, commodity funds built up a hefty net long position in soybeans given demand for U.S. soybeans by China that has shrunk supplies to the lowest level in 32 years. By contrast, funds sold wheat and corn during the summer on the outlook for ample U.S. and global supplies for both. ***    ***On Friday, U.S. soybean futures fell nearly 3 percent and the benchmark November contract — the main harvest delivery — at the Chicago Board of Trade dipped below $9 a bushel for the first time since July as USDA confirmed the record crop. The benchmark November soybean contract settled down 23-1/2 cents at $9.03 per bushel.***    ***”The crop size does look good. It’s a record high and we’re looking at an increasing carry-over,” said Anne Frick, an oilseed analyst with Prudential Bache Commodities. “I still think there are a few things around the edges though that are bullish in addition to the obviously very strong exports. USDA is pretty much estimating that South America will use up all of its soybeans … and they dropped their crop estimate for China.”***    ***CBOT corn turned higher late Friday, rebounding from an oversold condition. A drop in USDA’s forecasts for China’s corn crop and end-season stocks next year spurred speculators. Corn for December delivery ended up 4-1/2 cents at $3.19-3/4.***    ***Wheat prices bounced on Friday after the front CBOT wheat contract fell to its lowest level since April 2007 — pressured by a global supply glut. September wheat settled up 9 cents at $4.41-3/4 after touching a contract low at $4.25-1/4.******PHOTO: Iowa soybean field taken in late August by Christine Stebbins. Active soy harvest in the heart of the U.S. crop belt is still weeks away, crop specialists say.

It’s crunch time for soybeans — if only processors could find any to crunch.     The protein-rich bean, in huge demand around the world for foods from edible oil and tofu to feedstocks for both animals and biodiesel plants, is in the grip of a supply scare.    The United States, the single-largest grower and exporter of soy, is forecast to produce a record-large crop of 3.2 billion bushels this year. Harvest starts in the Midwest grain belt in a few weeks.    So why did Chicago Board of Trade soybeans of September delivery reached a two-week high of $11.64-3/4 a bushel on Friday? Because while supply will be big, demand — nervous demand — will be bigger, at least for a while.    ”If soybeans are ever going to be tight, it’s right now — it’s this week, it’s next week, into the new crop,” said Dan Cekander, a grain market analyst at brokerage Newedge USA.     The U.S. soybean marketing year ends on Aug. 31, with the opening of the traditional harvest month of September. On that date, U.S. soybean stocks-on-hand are expected to have fallen to a 32-year low — with more declines seen before harvest can replenish supplies for processors and exporters.    ”The other problem you have exacerbating the situation is the new-crop maturity is delayed, so the harvest is going to be delayed. So it’s not like you can all of a sudden turn on a lot of new-crop supplies — just because the old-crop marketing year ended,” Cekander told Reuters TV on Friday.    Active soy harvest in the central Midwest — Illinois and Iowa alone produce a third of all U.S. soybeans — is not expected until the third or fourth week in September.    So U.S. cash soybean prices soared last week as exporters and processors kept battling over dwindling old-crop supplies. Exporters at New Orleans were bidding as much as $2.10 per bushel over CBOT November futures prices to draw in soybeans on Friday, up from a premium of $1.35 over a week earlier.    Processors tried to compete but many continued to be forced to take extended “down time” for lack of bean supplies to crush into soybean meal, a popular high-protein livestock feed, and oil. Some Midwest brokers were quoting prices of up to $100 per ton above CBOT September futures for loaded railcars.    ”What that tells you is that there are end users right now paying prices as high as they paid at the very height of the bull market a year ago in 2008″ for soymeal, Cekander said.     Driving the strength in prices continues to be China’s torrid buying. But a drop in temperatures this week in the Midwest also sent a shiver through traders fearing an early frost that might cut yields in soybeans.    CBOT prices fell on Monday amid outlooks for milder U.S. crop weather through the middle of September. Also weighing on prices were worries that China may unilaterally terminate derivative contracts with some foreign banks that provide over-the-counter commodity hedgers services.PHOTO: Northwestern Illinois fields after an August shower taken by Christine Stebbins

Soybean prices could extend Friday’s strength in coming days given China’s latest buying spree of U.S. soybeans as well as a seasonal tendency for soy prices to rise going into September. Every day last week, the U.S. Department of Agriculture confirmed that China, the world’s top soy buyer, made big purchases of soybeans — 896,000 tonnes in all, or some 15 ocean cargoes for delivery from September onward.     ”The big story has been the Chinese and their drumbeat of buying,” said Rich Feltes, senior vice president of MF Global Research.     The United States supplies 45 percent of the world’s soybean exports, followed by Brazil and Argentina. The weakness in the dollar and last week’s drop in prices made U.S. soybeans an attractive buy for China. U.S. cash soybeans are cheaper than Brazilian soy for loadings all the way through February.    The China National Grain and Oils Information Center, a think-tank based in Beijing, said on Friday the country would likely continue its brisk import pace. Traders and analysts will be watching for signs of new Chinese demand, such as rising cash markets at export points such as New Orleans.    ”Tight farmer holding, hand-to-mouth users that are coming to the trough, a very tight old-crop carry-over situation, and this record pace of PRC buying of new-crop are all converging as we undertake this transition to new crop,” Feltes said.    The marketing year for U.S. soybeans ends in about a week on Aug. 31. USDA has already forecast end-season stocks on hand of soybeans to shrink to a 32-year low of 110 million bushels. For traders, that means a tricky tug of war will continue for several more weeks as exporters battle domestic soybean processors for scarce remaining supplies. The U.S. soy harvest will be late this autumn given the immaturity of the crop.    ”I’m looking for prices to bounce (this) week seasonally. We seem to get a rally from August into September” amid the transition from old- to new-crop soy supplies, said veteran oilseed analyst Anne Frick of Prudential Bache Commodities.     HUGE US CORN/SOY HARVESTS LIKELY, BUT GROWTH LAGS Tight stocks mean soy will remain the leader at the Chicago Board of Trade grain complex. But crop scouts on an annual U.S. crop tour last week underscored both the current immaturity of corn and soybeans but also the clear potential for big yields. Farm markets newsletter Pro Farmer, the tour’s organizer, forecast the American corn harvest at 12.807 billion bushels with an average yield of 160.1 bushels per acre.    That was above USDA’s forecast as of Aug. 1 for 12.761 billion bushels and 159.5 bpa yield — already ranking as the second-largest U.S. corn crop in history. The group also pegged soybean production at 3.150 billion bushels with an average yield of 41.0 bpa. That compared with USDA’s outlook earlier this month for a crop of 3.199 billion bushels at a yield of 41.7 bpa — the largest on record.    Analysts were not surprised by the Pro Farmer numbers, but said the lagging maturities of both crops highlighted the need for a warm September to ripen yields, for beans in particular.   ”It’s going to be sensitive here until you know whether you get an early frost,” analyst Dan Cekander at Newedge USA said.    The U.S. Census Bureau will issue July soybean crush data on Thursday, which should confirm the struggle going in the U.S. cash markets to secure quick-delivery soybeans. Traders expect the crush — which measures the amount of soymeal (a livestock feed) and soyoil produced as well as soybeans crushed — to be 10 million to 15 million bushels below July 2008 when processors crushed 139.3 million bushels. This year, many processors extended their plant downtime maintenance in July due to both weaker profit margins and the unwillingness to outbid exporters for spot soybeans.   CBOT September soybeans closed Friday at $10.23 a bushel — just 1-1/2 cent lower on the week, rebounding from a mid-week sell-off. Corn tread despite the outlook for a bumper crop, ending the week nearly unchanged at $3.21-3/4. Wheat meanwhile is hovering at eight-month lows as world supplies build. September fell 4 percent to $4.60-1/4.PHOTO: Iowa soybean field in mid-August taken by Christine Stebbins

The bearish sentiment that took over Chicago Board of Trade grain markets last week may continue in coming days, especially if nearly ideal greenhouse conditions continue to help maturing crops in the Midwest.    Confirmation by the U.S. Department of Agriculture of bumper corn and soybean harvests coming this autumn sent grain prices lower last week. But new export interest by China for soybeans or slide in the dollar could still buoy prices.     Soybeans will grab the spotlight when the markets open on Sunday night after a huge dive on Friday as the CBOT August soybean contract expired 87-1/4 cents lower — or 7.4 percent — at $11, a two-week low.     Disappointing monthly domestic soybean crush numbers along with big, unexpected last-minute deliveries against the August soy contract — a signal that some companies had secured enough cash beans for now before harvest — triggered the selling.     ”Beans are the market to be tracking the next few days. They remain the most jittery and lively all the grains,” said Gavin Maguire, an analyst with brokerage EHedger. “But they also have reached a very critical technical point. If we open lower (this) week, essentially the charts will have etched out a very bearish pattern.    However, if new-crop soybeans can hold chart support that “leaves the upside for another run,” he added.    Now that August soy contract has expired, traders will watch new-crop November beans for buy/sell signals. Key support in that contract, always the main “harvest” delivery each year, is seen at $9.80, a level penetrated late Friday. November closed just above that point at $9.81-1/2, down 37-1/4 cents.     Given the price break, new sales to China of U.S. soybeans would provide support. Driven by China’s huge appetite, U.S. soy export sales with more than three weeks left in the season was already 104 percent of USDA’s forecast.    HOT AS ALWAYS, BUT RAINS EXPECTEDThe weather remains the wild card that can always rattle traders, but the most recent forecasts late Friday indicated plenty of rain and heat across the U.S. Midwest — ideal conditions to promote corn and soybean growth and yields.”We have to make sure this rain event develops as forecast, especially in the central and eastern Corn Belt next week — filling in the dry spots,” said analyst Dan Cekander at brokerage Newedge USA.  Dry pockets being watched include southern Minnesota, northern Iowa and northwestern Ohio. But most of the Midwest has had more than enough moisture to enhance crop development following the coolest, wettest July in years. Corn went through pollination last month under perfect conditions, the main reason the USDA boosted its corn yield estimate by six bushels per acre to 159.5, just under the record of 160.3 bpa.    As CBOT traders say: big crops get bigger. So if August weather is as nice as July was, the U.S. corn crop — now forecast as the second-largest in history at 12.76 billion bushels — may get even larger. Importers are quite aware of that. For soybeans, U.S. output is already projected to be the largest on record at 3.199 billion bushels. Soy would benefit even more than corn from rains in August, since beans fill pods out this month and mature a little later than Midwest corn.           The annual Pro Farmer Midwest Crop Tour begins on Monday, giving traders another read on the U.S. corn and soybean harvest. USDA data last week was based on Aug. 1 conditions. Crop scouts this week will inspect and sample fields from Ohio to South Dakota and estimate final yields on Friday.Lastly, while fundamentals usually dominate the price action in grains during the U.S. growing season, sharp moves in the dollar, equities and oil — all indicators of the health of the economy — will also continue to factor into grains.     ”They are still important because you have some people who trade commodities according to what those outside factors are doing,” Cekander said.PHOTO: Northern Illinois soybean field taken by Christine Stebbins.